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Home My WebLink About2006-1012 Study Session Packet CITY OF ASHLAND CITY COUNCIL STUDY SESSION AGENDA Thursday, October 12, 2006 at 5:15 p.m. Council Chambers, 1175 East Main Street 1. Discussion of Goals for Transient Occupancy Tax Use 2. Discussion of FY 2007-08 Budget Process and Calendar In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Administrator's office at (541) 488-6002 (TrY phone number 1-800-735-2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to the meeting (28 CFR 35.102-35.104 ADA Title I). ~.l' CITY OF ASHLAND Council Communication Meeting Date: October 12, 2006 Department: Administrative Services Contributing Departments: Approval: Martha Benne Study Session - Goals for Transient Occupancy Tax Use Primary Staff Contact: Lee Tuneberg ~ E-mail: tunebert@ashland.or.us Secondary Staff Contact: NA E-mail: Estimated Time: 60 minutes Staff Requests: Staff requests that Council discuss what outcomes are desired from the use of the General Fund revenue generated by the Transient Occupancy Tax (TOT) in conjunction with State requirements and the needs of the City. Statement: This is a study session. The discussion should provide a better understanding for Council and staff on the history of this tax, and its uses, and may be the basis for subsequent changes in the tax or the City's goal(s) in the use of the revenue generated. In the past there has been significant discussion by Council and the Budget Committee regarding the use of the TOT revenue and the grant process for distributing the funding. Suggestions range from additional changes on how much is awarded to whom, better criteria for awarding grants to applicants, different requirements for applying and different reporting requirements needed for the use of granted monies. More specifically, areas of concern have included: 1. How much do we get each year? 2. What percent of TOT revenue does Council want to go to the General Fund and what percent go toward economic development and visitors and convention services (per state statute the minimum to be spent on tourism in FY 2006-07 is $215,456)? 3. How could we increase funding for visitor services or economic development? 4. What other activities should or could the City fund with these revenues? 5. Can we raise the TOT rate above 7%? What happens to the added revenue? 6. How can we give better direction to the budget committee in awarding grants? 7. Should CoC and OSF do an annual application for the amount they need for that year's activities or should they each receive a fixed amount? 8. Should someone or group other than the budget committee award the grants? 9. How do we ensure that the money granted is used as intended and effectively? 10. Should we do two year grant awards like the City does for social grants? 11. Should we have a more streamlined application process and/or reporting for very small grants (ie - under $2,500)? ~.t. 1 12. Do we have particular goals for visitors services that would change the application process? This may not be a comprehensive list. Background: The Transient Occupancy Tax (TOT) was first passed by Ordinance #1907 in 1977. The Ordinance states that each transient who rents a room, house, or similar structure for less than 30 days will be charged a 7% tax on the room rate. Each establishment is allowed to retain 5% of those taxes collected for administering the tax and the remainder goes to the City's General Fund. It is estimated that in FY 2006-2007, the operator(s) will receive almost $79,000 in total for collecting the tax, and the General Fund will receive $1.5 million in TOT funds. Currently, there are six establishments that report monthly and sixty-six that report quarterly. It is estimated the staff spends one hour per quarter on collections. The City allocates the TOT revenue generated by the ordinance in the General Fund The latest Resolution is 2004-32 and it was adopted on September 21,2004, effective for FY 2004-2005. The provisions of the resolution sunset three years from adoption (September 21,2007, and FY 2006-2007) and thus a replacement resolution will need to be implemented this year in preparation for the FY 2007-2008 budget. Below is a table that shows sianificant chanaes in the arant process over the vears. There have been some clarifying or correcting resolutions in between those presented but they are immaterial to this discussion. Action #93-12 Increase in #98-02 60% to COC #2004-11 Comply #2004-32 Include Grant Amount & 28% to OSF with ORS Tourism Arts Commission Awarded by: Application Per resolution Per resolution Per resolution Grant Award CoC Per Application $156,000 $240,432 $240,432 (same year) Grant Award OSF Per Application $72,800 $110,000 $110,000 Basis for Increase General Fund Hotel/Motel Tax Inflation/Deflation Inflation/Deflation Revenue Growth Revenue Growth Grant Report Not specified Next FY - Jan. 31 Next FY - Jan. 31 Next FY - Jan. 31 The allocation of the TOT revenue per the resolution for FY 2006-2007 and calculation of the tourism amount per the state definition is attached. Please note that in every process many grantees and budget subcommittee members have struggled with several issues. Followina is a list of issues relatina to most of the applicants: A. The resolution guidelines are general in nature to allow creativity but that can also lead to confusion when evaluating and comparing applications, their perceived benefit and the appropriate amount to grant. B. The subcommittee may be asked to grant to an applicant for a worthy activity who has only a preliminary approval letter from the IRS. C. The application, award and subsequent reporting processes may be discouraging to grant applicants requesting small amounts. A significant recent change has been PA' requiring the 501 (c) applicant to provide their most current 990 report to the IRS regardless of how small the City's grant may be, especially when compared to the applicant's other revenue streams. D. The City could be spending more money administering and pursuing information on small amounts granted to a one-time event than the amount awarded to the applicant. E. The state requirement for tourism is benchmarked on "spending." Measures on the effectiveness of spending may be difficult to quantify, especially for smaller activities. Single event grants are somewhat easier for reporting as long as the event happens early in the Fiscal Year (FY) such as July - February. For ongoing activities (Chamber, OSF, and many small amount applicants) and those that happen after the new application process has started, there are added problems as listed below: A. Chamber and OSF were exempted from the annual application process with Resolution #98-02 which has caused concern with the contract award process regarding what the community is getting for the amount awarded. B. A repeat grantee could be applying for a second year grant before completing the prior year's activities. C. In many cases, a second year grant will have to be awarded (if approved during the budget process) before the first year's report can be generated. D. A grantee's first year activity may not relate to a second year activity, thus success or failure on a previous awarded activity may not be a good indicator of a subsequent grant's potential success. There is considerable interest in dealing with these issues. Changes in the processes for applying, awarding, utilization or reporting can be significant and may require an appropriate lead time for compliance. At best it will require input from participants and the public that may not fit well if held to the budget or contract approval process. A process to change the resolution will need to begin early enough to be completed in time for revisions to the grant application, directions and forms that are done in February. This would help to make the FY 2007 -2008 grant and budget schedule smoother. The amount received in the General Fund is allocated by current Resolution 2004-32 that states the City Council will appropriate thirty three and one third percent of the anticipated Transient Occupancy Tax monies for Economic and Cultural Development with the remaining sixty six and two thirds percent allocated to the General Fund to fund Police, Fire and Community Development costs. A change in the allocation guidelines established in the current resolution will impact operations and funding of General Fund services. Reducing the portion that goes for general support will require additional reliance on other revenue streams such as property taxes in the General Fund departments. An example of such an impact for FY 2006-2007 follows. fA' ~ TOT Revenue Portion to General Fund TOT Percentage of Total Revenue to the General Fund 2007 Adopted Current 7% $ 1,514,100 1,009,450 6% Rate shortfall Revenue shortfall 504,650 3.9747 4.2865 0.3118 0.5920 0.2802 $ 477,000 Portion to Grantees Property Tax Rate Permanent Rate Limit Unlevied Portion available Tax rate increase to maintain $1 million for General Fund costs Property taxes alone will not be sufficient to maintain the General Fund at the approximate $1 million level the TOT funds have provided in the past. A significant portion of the revenues generated by the TOT continues as a need in the General Fund. Related City Policies: The TOT could be increased to provide additional revenue to be dedicated towards tourism. In FY 2003-2004, the following revised statute was passed regarding TOT. ORS.305.824 ~11 (3) A unit of local government that imposed a local transient lodging tax on July 1, 2003, may not decrease the percentage of total local transient lodging tax revenues that are actually expended to fund tourism promotion or tourism-related facilities on or after July 2, 2003. (5) Subsections (1) and (2) of this section do not apply to a new or increased local transient lodging tax if all of the net revenue from the new or increased tax.... is used consistently with subsection (6) of this section to: (a) Fund tourism promotion or tourism related facilities; (b) Fund city or county services; or (c) Finance or refinance the debt of tourism-related facilities.... (6) At least 70 percent of net revenue from a new or increased local transient lodging tax shall be used for the purposes described in subsection (5) (a) or (c) of this section. No more than 30 percent of net revenue from a new or increased local transient lodging tax may be used for the purpose described in subsection (5) (b) of this section. (7) 'Tourism promotion' means any of the following activities: (a) Advertising, publicizing or distributing information for the purpose of attracting and welcoming tourists; (b) Conducting strategic planning and research necessary to stimulate future tourism development; (c) Operating tourism promotion agencies; and (d) Marketing special events and festivals designed to attract tourists. (9) 'Tourism-related facility': (a) Means a conference center, convention center or visitor information center; and (b) Means other improved real property that has a useful life of 10 or more years and has a substantial purpose of supporting tourism or accommodating tourist activities. Tourism is defined as someone who travels 50 miles or more or who spends the night in Ashland to attend an event. ~., The following table illustrates how an increase from a 7% tax to 8% would affect the amount required to go toward tourism and what additional amount would be generated for other use per ORS 305.824(5)(b). Current 7% Increase to 8% Total TOT Revenue. $ 1,514,100 $ 216,186 $1,730,286 Portion of increase to Tourism (70%) 151,330 Portion of increase to Economic Development (30%) 64,856 This means that 70% of the revenue generated by an increase ($151,330) will need to be added to the amount already going toward tourism ($235,000), of which the largest portion goes to CofC for visitors and convention services. Only $64,856 would be generated for City services not tourism based. Staff is asking for direction to set up the budget and granting process for the coming year(s). Does Council want to: 1. Change the percentage of TOT that goes to VCB, economic development or other grants? 2. Increase funding for VCB or economic development by increasing the TOT rate? 3. Require CoC or OSF to apply for grant monies like other grant applicants? 4. Set a fixed allocation for CoC or OSF? 5. Change or set specific criteria or goals for the grants as in previous resolutions? 6. Allow for a multi-year allocation? 7. Make the application and reporting process easier for the little grants? 8. Change how the applications are reviewed (and how allocations are made)? Council Options: Council can ask staff to: 1. Bring to Council a resolution that mirrors the existing 2004-32 for renewal. 2. Bring to a future Council meeting a revised resolution that addresses items discussed in this study session. 3. Work with identified individuals (Council members, staff or others) to create a new resolution that manages and/or allocates the TOT revenue collection and distribution differently per State guidelines and City goals. Potential Motions: This is a study session so no formal decision can be made at this time. Attachments: Resolution 2004-32,2004-11,2000-25, 1998-02, and 1993-12 Economic and Cultural Development Grant Allocation with Tourism Calculation Small Grants Tourism Allocation Economic and Cultural Development Grant History rj.' RESOLUTION NO. 2004- ""b7... A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASHLAND REITERATING ITS POLICY OF RELATING THE EXPENDITURE OF MONIES FOR ECONOMIC AND CULTURAL DEVELOPMENT TO THE HOTELIMOTEL (Transient Occupancy) TAX AND REPEALING RESOLUTION 2004-11 THE CITY OF ASHLAND RESOLVES AS FOLLOWS: SECTION 1. That the city council recognizes that the source of monies for the Economic and Cultural Development Grant program is the HotellMotel Tax. SECTION 2. The following are the goals which the Economic and Cultural Development Committee is attempting to meet by granting money to applicants: a) Tourism Promotion. b) Economic Development by: I) Responding to general inquiries about business in the city; 2) Providing assistance to existing small businesses; 3) Providing technical and financial assistance for the expansion of existing businesses; 4) Providing technical and financial assistance for the development of new businesses; or 5) Providing such other services and support to business as the city council may deem beneficial. c) Cultural Development. SECTION 3. Beginning in Fiscal Year 2004/2005, the city council will appropriatc~ thirty- three and one-third percent (33.3%) of the anticipated HotellMotel tax monies for Economic and Cultural Development. The City of Ashland has determined that as of July 1, 2003, $186,657 or 14.23% of total HotellMotel tax revenues were expended on tourism promotion, as defined in Chapter 818 of the 2003 Oregon Laws, and will continue to be spent on tourism promotion increased or decreased annually consistent with the estimated TOT revenues budgeted. The amount to be allocated annually to Ashland Chamber of Commerce (COe) and Oregon Shakespeare Festival (OSF) for promoting tourism per the state definition shall be $80,432 and $11 0,000, respectively, adjusted each year by the amount of inflation or deflation established in the Budget process. An additional amount of $160,000, adjusted each year by the amount of inflation or deflation established in the Budget process, will be grant,~d annually to COC for economic development projects in cooperation with City staff. The allocations in this paragraph shall sunset after three years. Any additional amount for tourism required by Chapter 818 shall be allocated to COC, OSF or other group during the budget proces~. The remainder of the monies budgeted for these grants may be allocated to grantees for activities fitting in any of the three categori(~s set forth in Section 2 of this Resolution. TOT Resolution 9/07/04 page I of2 By January 31 of each year each recipient of grants under this resolution shall submit a report to the city council setting forth how the grant funds received were expended in furtherance of the goals set forth in Section 2. SECTION 4. The following guidelines and criteria are established for the Economi.c and Cultural Development Grants: a) Grantee shall be a 501(c) non-profit agency. b) Grantee shall be a non-governmental agency. c) Grantee shall promote livability for the citizens of Ashland. d) The minimum grant proposal will be $1,000. e) The grant will benefit Ashland in regards to enrichment and activities of an economic nature. t) Grantee shall serve the population in Ashland but may encompass other venues in the Rogue Valley. g) Irrespective of sub-paragraph 'b', the City of Ashland Public Arts Commission may apply for and receive funds. SECTION 5. Resolution 2004-11 is repealed upon passage of this resolution. SECTION 6. This resolution takes effect upon signing by the mayor. This resolution was read by title only in accordance with Ashland Municipal Code Section 2.04.090 duly ~(~ ~ P ASSE../1nd ADOPTED this ):lJ<day of ~t 2004 ~~ , Barbara Christensen, City Recorder fI./~'1!I ~ SIGNED and APPROVED this~day abras4t 2004: ;/ ~~~. Alan DeBoer, Mayor TOT Resolution 9/07/04 page 2 of2 ~ RESOLUTION NO. 2004- II A RESOLUTION OF THE CITY COUNCil OF THE CITY OF ASHLAND REITERATING ITS POLICY OF RELATING THE EXPENDITURE OF MONIES FOR ECONOMIC AND CULTURAL DEVELOPMENT TO THE HOTEUMOTEl (Transient Occupancy) TAX AND REPEALING RESOLUTION 2000-25 THE CITY OF ASHLAND RESOLVES AS FOLLOWS: SECTION 1. That the city council recognizes that the source of monies for the Economic and Cultural Development Grant program is the Hotel/Motel Tax. SECTION 2. The following are the goals which the Economic and Cultural Development Committee is attempting to meet by granting money to applicants: a) Tourism Promotion. b) Economic Development by: 1) Responding to general inquiries about business in the city; 2) Providing assistance to existing small businesses; 3) Providing technical and financial assistance for the expansion of existing businesses; 4) Providing technical and financial assistance for the development of new businesses; or 5) Providing such other services and support to business as the city council may deem beneficial. c) Cultural Development. SECTION 3. Beginning in Fiscal Year 2004/2005, the city council will appropriate thirty-three and one-third percent (33.3%) of the anticipated Hotel/Motel tax monies for Economic and Cultural Development. The City of Ashland has determined that as of July 1, 2003, $186,657 or 14.23% of total Hotel/Motel tax revenues were expended on tourism promotion, as defined in Chapter 818 of the 2003 Oregon Laws, and will continue to be spent on tourism promotion increased or decreased annually consistent with the estimated TOT revenues budgeted. The amount to be allocated annually to Ashland Chamber of Commerce (COG) and Oregon Shakespeare Festival (OSF) for promoting tourism per the state definition shall be $80,432 and $110,000, respectively, adjusted each year by the amount of inflation or deflation established in the Budget process. An additional amount of $160,000, adjusted each year by the amount of inflation or deflation established in the Budget 1- 2004 TOT final resolution process, will be granted annually to COC for economic development projects in cooperation with City staff. The allocations in this paragraph shall sunset after three years. Any additional amount for tourism required by Chapter 818 shall be allocated to COC, OSF or other group during the budget process. The remainder of the monies budgeted for these grants may be allocated to grantees for activities fitting in any of the three categories set forth in Section 2 of this Resolution. By January 31 of each year each recipient of grants under this resolution shall submit a report to the city council setting forth how the grant funds received were expended in furtherance of the goals set forth in Section 2. SECTION 4. The following guidelines and criteria are established for the Economic and Cultural Development Grants: a) Grantee shall be a 501 (c) non-profit agency. b) Grantee shall be a non-governmental agency. c) Grantee shall promote livability for the citizens of Ashland. d) The minimum grant proposal will be $1,000. e) The grant will benefit Ashland in regards to enrichment and activities of an economic nature. f) Grantee shall serve the population in Ashland but may encompass other venues in the Rogue Valley. SECTION 5. Resolution 2000-25 is repealed upon passage of this resolution. SECTION 6. This resolution takes effect upon signing by the mayor. This resolution was read by title only in accorda~~ with ASh~ Municipal Code 92.0 . 90 duly PASS D and ADOPTED this -+- day of. 'Pi ' 2004. ~ arbara Christensen, City Recorder SIGNED and APPROVED this ~ day of IYJA .,.. ,2004. ~~~ R~m:~ Paul Nolte, City Attorney 2- 2004 TOT final resolution Alan W. DeBoer, Mayor 1. Repealed by RESO 2004-32. 9/22/04 ~ ~ RESOLUTION NO. J (JlJb t.16 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASHLAND REITERATING ITS POLICY OF RELATING THE EXPENDITURE OF MONIES FOR ECONOMIC AND CULTURAL DEVELOPMENT TO THE HOTEUMOTEL (Transient Occupancy) TAX AND REPEALING RESOLUTION 98-23. THE CITY OF ASHLAND RESOLVES AS FOLLOWS: SECTION 1. That the City Council recognizes that the source of monies for the Economic and Cultural Development Grant program is the HotellMotel Tax. SECTION 2. Beginning in Fiscal Year 2001/2002, the City Council will appropriate thirty three and one-third percent (33.3%) of the anticipated Hotel/Motel tax monies for Economic and Cultural Development. Sixty percent (60%) of these funds will be allocated to the Ashland Chamber of Commerce; twenty eight percent (28%) will be allocated to the Oregon Shakespeare Festival; and twelve percent (12%) will be granted to local organizations which promote Economic and Cultural Development. The anticipated budget for subsequent fiscal years shall be based on the previous year's actual receipts. Actual receipts which exceed the anticipated amounts will remain in the General Fund. By January 31 of each year the Chamber of Commerce and the Shakespeare Festival shall make a report to the City Council regarding meeting the goals in Section 3. SECTION 3. The following are the goals which the Economic and Cultural Development Committee is attempting to meet by granting money to applicants. a) To respond to general inquiries about business in the City. b ) To promote tourism. c) To provide assistance to existing small businesses. d) To provide technical and financial assistance for the expansion of existing businesses. e) To provide technical and financial assistance for the development of new businesses. f) To provide information and financial assistance to small cultural organizations to: 1) attract tourists with emphasis on the off-season; 2) create a greater diversity of cultural opportunities for our citizens. SECTION 4. The following guidelines and criteria are established for the Economic and Cultural Development Grants. a) Grantee shall be a 501 (c) non-profit agency. b) Grantee shall be a non-governmental agency. c) Grantee shall promote livability for the citizens of Ashland. d) The minimum grant proposal will be $1,000. G:\city-admin\admin\Administration\Reso-Hotel Motel tax 2000 e) The grant will benefit Ashland in regards to enrichment and activities of an economic nature. f) Grantee shall serve the population in Ashland but may encompass other venues in the Rogue Valley. SECTION 5. Resolution 98-23 is repealed upon passage of this resolution. This resolution was read by title only in accordance with Ashland Municipal Code Sec. 2.04 90 duly PASSE a d ADOPTED this.f!L day o~ooo. arbara Christensen, City Recorder SIGNED and APPROVED this;tIJ day of ~ .2000. ~M-~ Catherine M. Shaw, Mayor ~d as to form: Paul No te, City Attorney G:\city-admin\admin\Administration\Reso-Hotel Motel tax 2000 1. Original Ordinance: 1870 Amended By: 1907 1975 2024 2216 2400 2632 2674 2692 2745 See Also: Resolutions: 1986-47 1986-49 1987 -09 1990-36 1993-12 1998-02 1998-23 2000-25 2. Text of RESO is already formated for word processor. RESOLUTION NO. 98- O~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASHLAND REITERATING ITS POLICY OF RELATING THE EXPENDITURE OF MONIES FOR ECONOMIC AND CULTURAL DEVELOPMENT TO THE HOTEUMOTEL (Transient Occupancy) TAX AND REPEALING RESOLUTION 93-12. THE CITY OF ASHLAND RESOLVES AS FOLLOWS: SECTION 1. That the City Council recognizes that the source of monies for the Economic and Cultural Development Grant program is the HotellMotel Tax. l:;ECTIQN 2. That the City Council will appropriate thirty three and one-third perce~ (33.3%) of the anticipated HotellMotel tax monies for Economic and Cultural Development. Sixty percent (60%) of these funds will be allocated to the Ashland Chamber of Commerce; twenty eight percent (28%) will be allocated to the Oregon Shakespeare Festival; and twelve percent (12%) will be granted to local organizations which promote Economic and Cultural Development. Effective with the 1999-2000 Budget, and annually thereafter, the allocations to the Shakespeare Festival and the Chamber of Commerce shall be adjusted by an amount equal to their respective shares of the actual tax collection in the previous fiscal year. By January 31 of each year the Chamber of Commerce and the Shakespeare festival shall make a report to a joint meeting of the City Council and the Budget Committee regarding meeting the goals in Section 3. SECTION 3. The following are the goals which the Economic and Cultural Development Committee is attempting to meet by granting money to applicants. a. To respond to general inquiries about business in the City b. To promote tourism c. To provide assistance to existing small businesses d. To provide technical and financial assistance for the expansion of existing businesses e. To provide technical and financial assistance for the development of new businesses f. To provide information and financial assistance to small cultural organizations to: 1) attract tourists with emphasis on the off-season; 2) create a greater diversity of cultural opportunities for our citizens SECTION 4. The following guidelines and criteria are established for the Economic and Cultural Development Grants. a. Grantee shall be a 501 (c) non-profit agency b. Grantee shall be a non-governmental agency c. Grantee shall promote livability for the Citizens of Ashland d. The minimum grant proposal will be $1,000 e. The grant will benefit Ashland in regards to enrichment and activities of an economic nature f. Grantee shall serve the population in Ashland but may encompass other venues in the Rogue Valley SECTION 4. Resolution 93-12 is repealed upon passage of this resolution. This resolution was read by title only in accordance with Ashland Municipal Code ~2.04.090dulyPASSEDandADOPTEDthis /7 dayof 1~ ,1998. ~ Barbara Christensen, City Recorder SIGNED and APPROVED this 1.7" day of 1~~ ,1998. ~~ Catherine M. Golden, Mayor Reviewed as to form: j)~~---- Paul Nolte, City Attorney Revised: 02/13/98 (G:\budget\economic\reso98) 1. Original Ordinance: 1870 Amended By: 1907 1975 2024 2216 2400 2632 2674 2692 2745 See Also: Resolutions: 1986-47 1986-49 1987 -09 1990-36 1993-12 1998-02 1998-23 2000-25 RBSOLUTrOB BO. '13-1 ~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASHLAND, REITERATING ITS POLICY OF RELATING THE EXPENDITURES OF FUNDS FOR ECONOMIC DEVELOPMENT TO THE HOTEL/MOTEL (TRANSIENT OCCUPANCY) TAX. RECITALS: A. The maintenance and development of tourism is directly interrelated to the health of the entertainment, food, and lodging industries in Ashland. B. In 1979, a formula was implemented which allocated a percentage of the Hotel/Motel Tax revenues to promote and enhance tourism and other economic development strategies. C. The Citizens Budget Committee and city Council have determined that funding for economic development activities should henceforth be tied to the annual growth or reduction of current general fund revenues. THE CITY OF ASHLAND RESOLVES AS FOLLOWS: SECTION 1. That the Co~ncil hereby restates its recognition that the source of funding for economic development activities continues to be the Hotel/Motel Tax. SECTION 2. That the Council is committed to maintaining its historic support for economic development activities as a whole, but cannot limit the citizens Budget Committee or future city Councils to specific appropriations for programs which have been funded in the past. The foregoing Resolution was READ by title only re9Ular meeting Of~y Council of the City ~~ day of , 1993. ~tift~ Nan E / Franklin City Recorder and DULY ADOPTED at a of Ashland on the 1d. , day of ~ ' 1993. ~ :J~~ CatherJ.ne M. Golde Mayor SIGNED and APPROVED this ~ P ul city Attorney (c1:\ecooclev.Res) 1. See Also: RESO 2000-25 RESO 1998-23 RESO 1998-02 RESO 1987-09 RESO 1986-49 RESO 1986-47 City of Ashland Economic and Cultural Grant Allocation With Tourism Calculation 2007 Adopted Tourism Payment per month Hotel/Motel Tax Revenue (5% growth) $ 1.514.100 Per Resolution 2004-32 14.23% Minimum amount needed for Tourism $ 215.456 $ 215.456 1/3 of the proposed revenue $ 504,650 Additional Carryover from Prior Year* 5,000 Total amount budgeted $ 509,650 Amount Allocated: Per Resolution 2004-32 (3% inflation) Chamber to promote tourism $ 82.845 $ 82.845 $ 6,904.00 Chamber for economic development 164.800 13,733.00 OSF to promote tourism 113,300 113,300 $ 9,441.67 $ 360,945 $ 196,145 $ 20.637 $ 9.441.67 Other Grants $ 148,705 $ 19,311 $ 215,456 * Please note that the City Council determined that any grant monies not awarded or returned from a grantee are rebudgeted for expenditure in the next fiscal year. City of Ashland FY 2006-07 Economic and Cultural Development Grant Applicants Small Grants Tourism Allocation Adopted Tourism Allocated to Organization Requested Amount Amount Percentage Tourism Ashland Independent Film Festival $ 30,000 $ 16,000 $ 20,000 0.67 10,667 Rogue Valley Symphony 14,750 8,000 1,622 0.11 880 Nuwandart 5,500 1,500 1,100 0.20 300 Ashland Gallery Association 33,200 16,000 19,400 0.58 9,349 Community Works 10,000 2,500 0.00 St. Clair Productions 6,000 4,000 2,400 0.40 1,600 Arts Council 12,500 5,000 7,500 0.60 3,000 Multi Cultural Association 10,000 10,000 ~- 0.00 The Jefferson Center for Religion 10,000 7,000 0.70 Lithia Arts Guild 15,431 9,000 3,086 0.20 1,800 Youth Symphony of Southern Oregon 5,500 5,000 0.00 Second Street Musicians 3,250 2,000 0.62 Dancing People Company 7,000 700 0.10 ScienceWorks 20,303 16,000 5,076 0.25 4,000 Konaway Nika Tillicum 5,000 5,000 2,500 0.50 2,500 Chautauqua Poets & Writers Board 5,000 5,000 0.00 SOWAC 8,000 8,000 0.00 Thrive 11,000 11,000 1,100 0.10 1,100 Children's Musical Theatre of Ashland 25,000 625 0.03 ArtNow 1,500 1,205 300 0.20 241 Rogue Opera 12,000 7,000 0.00 S. Oregon Repertory Singers 7,500 2,500 4,100 0.55 1,367 Peace House 9,766 0.00 Oregon Stage Works 51,000 5,000 20,400 0.40 2,000 Siskiyou Singers 7,000 5,000 300 0.04 214 Ballet Rogue 10,000 6,000 5,000 0.50 3,000 $ 336,200 $ 148,705 $ 98,909 38,804 Amount Available $ 148,705 Tourism Minimum $ 19,311 1 0/9/2006 ~ .e J! ~ 1:: I! (!) - -aC C I .!!!1Cl. .co ~. -i: 00 ~- (.)I! :E .. (.) .S! E o C o u W ... ... 0.. u,'E! 0... ~~ ~I ~ ~~ ... It) ... ~i ~~ ~... 8 ........, ...'E! N 0... ~~ o ...... 0 ~ -E ~ 0... ~~ N'" C;>" ....'E! 0... ~~ ~al ''E! g ... ~~ ~al 8l~ it~ lllal .o'E! en ... ~~ ... ... en .. ':''E! en... ~~ .. 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" ~ l! ~ o i 8 1 j c; ~ ... c .a (5 c: en ~ '" c: "iij ~ .c .5 li; C> c: .Q o :z . CITY OF ASHLAND Council Communication Study Session - Discussion of FY 2007-08 Budget Process and Calendar Meeting Date: October 12, 2006 Department: Administrative Services Contributing Departments: NA A h Approval: Martha Ben~, t/ Primary Staff Contact: Lee Tuneberg ~;:l E-mail: tuneber1@ashland.or.us r C/ c;/) Secondary Staff Contact: NA E-mail: Estimated Time: 30 minutes Staff Request: Staff asks that Council provide direction on how the FY 2007-2008 budget process could be changed to better meet City needs. Statement: Over the last five years the City has tried many things to make the budget process more effective. In the recent past we have tried fewer but longer night meetings, shorter but many night meetings, a shorter process that incorporated two Saturdays, more subcommittee meetings and limited to no subcommittee meetings in place of the entire committee. Each year the results from the annual survey of committee members indicate that the annual process is a success. (Please note that many council members do not participate in the survey in favor of hearing from the appointed members.) Beyond state requirements and eventually getting an adopted budget, the committee usually provides good comments for improvements that we attempt to address in subsequent years. However, each year there are verbal and written comments that ask if there is a better way to conduct the process and achieve a higher level of satisfaction. Attached is summary information from the last budget process and a table comparing scores over several years. This meeting is an opportunity for Council to ask itself what changes would council like to see in the FY 2007-2008 process slated to begin after January 1, 2007. Background: The budget process for municipalities in Oregon is governed by ORS 294. The statute is designed to provide an open process that engages the public in determining the budget for the next fiscal period. Recently the state allowed municipalities to either use a single year or a biennial budget process. Many agencies have adapted their process to prepare a two-year budget but Ashland has not. Many features of our current process look at more than the proposed year but appropriations are proposed, approved and adopted for only one. The spending authority of the appropriations lapses at the end of the year. ~A' The City's budget committee is made up of Mayor and Council and a like number of appointed citizens. This translates into a committee of fourteen which can present logistical and scheduling problems. Our council chamber venue barely accommodates fourteen at the table in addition to the minute taker. Staff usually sits at the presentation table which does not leave room for the City Administrator or Finance Director/Budget Officer resulting in questions being asked and answered away from the microphone and camera. A budget officer is appointed to manage the annual budget process. Ashland has traditionally identified the Finance Director as the budget officer but in all actuality, the responsibilities are shared and monitored by the City Administrator. The Administrative Services/Finance Department staffs all meetings, places public notices, coordinates the schedule, gathers and organizes all documents and publishes the final document. Attached is a sample calendar included in the State's Basic Budgeting Book and a schematic of the City's version. Ashland includes this example and a narrative each year in the budget document and documentation of compliance to Oregon Budget Law in the Appendix. In the past Ashland employed a subcommittee approach for all presentations outside of the meetings for the initial budget message delivery and wrap up where the committee sets the tax rate for the ensuing year. Around 2001 we transitioned to using subcommittee meetings only for granting social and economic monies since there tended to be nearly a full committee attendance at all other meetings. Attached is a summary table of the previous five years processes showing the number of meetings held and average time per meeting. Excluding the kickoff meeting in February and the grant subcommittee meetings held in late March or early April, the annual process has taken from four to eight meetings and a total time'~anging from eleven to seventeen hours. Considerable time is spent on the process and the final document. Understanding the City's complex financial operations is not easy and takes years to develop comfort. Contributing to the complexity are significant elements of the budget whose timing or requirements do not always mesh well. A few of these are: 1. Setting Council goals 2. Updating financial plans or rate models 3. Capital Improvements 4. Social and Economic grant processes 5. Including the Parks Commission budget within the City's process and document Our custom is to provide training opportunities to budget committee members at State conducted sessions in the Rogue Valley, specialized group and one-on-one training on Ashland's process is preformed by staff. The budget document .s an award winner that attempts to meet program criteria as a policy document, an operations guide, a financial plan and a communications device. Thus, this program encourages the City to create a document that far exceeds the minimal requirements specified by Oregon Budget Law. Oregon Budget Law requires an open and ,., legal process. Many of the things the City does to create the final budget document facilitates openness and communication. Ask yourself this, "How often do you find interesting and relevant information in the budget document and how often do you ask a question of a staff member who opens consults the document and offers an answer?" Many managers in the City do just that. Related City Policies: Annual budget process. Council Options: Council can: A. Provide staff with ideas on how to develop the FY 2007-2008 budget process differently based upon this discussion. B. Ask staff to bring back changes to the annual budget as part of a Budget Committee meeting. C. Request another meeting to discuss significant issues to be addressed in the coming budget process. Potential Motions: This is a study session so no formal decision can be made at this time. Attachments: Sample Budget Calendar The Budget Process Budget Committee Meeting History r&1 Sample Budget Calendar Sample Dates 1. Appoint budget officer. December 7 2. Appoint budget committee members. January 5 3. Prepare proposed budget. February 28 4. Print 1 st notice of budget committee meeting March 16 (not more than 30 days before the meeting). 5. Print 2nd notice of budget committee meeting March 24 (at least 5 days after 1st notice, but not less than 5 days before the meeting). 6. Budget committee meets. March 30 7. Budget committee meets again, if needed. April 6 8. Publish notice of budget hearing (5 to 30 days before the hearing). April 19 9. Hold budget hearing (governing body). May 4 10. Enact resolutions to: June 29 Adopt Budget Make appropriations Impose and categorize taxes. 11. Submit tax certification documents to the assessor by July 15. July 12 The Budget Process According to Oregon Law (ORS 294), the City of Ashland must prepare and adopt a balanced budget annually. In December, meetings are held with department heads, the Mayor, and City Council to set goals and priorities for the upcoming year. In April, a preliminary budget is prepared and presented to the Budget Committee, which, by law, comprises the Mayor, City Councilors, and seven citizen members. A summary of the recommended budget is published in the local newspaper. The City Council holds a public hearing prior to July 1, which may result in further changes. If a change will increase property taxes or increase expenditures within a fund by more than ten percent or $5,000, whichever is greater, the budget must be referred back to the Budget Committee. The City Council adopts the budget and levies taxes prior to June 30 each year. The adopted budget is filed with the county clerk and State of Oregon, and the Property Tax Levy is certified to the County Assessor by July 15 each year. The Budget Amendment Process Oregon Budget Law allows for amendments to the City budget for reasons unforeseen at the time of adoption. The City Council may adopt resolution changes that decrease one existing appropriation and increase another. Certain changes of ten percent or less to any fund require a supplemental budget. Changes over ten percent to any fund require a supplemental budget process similar to the annual budget requiring a public hearing. Further detail may be found in (ORS 294). The Budget Committee The Budget Committee is composed of the Mayor, City Councilors, and seven citizen members appointed by the governing board. The appointed members: .Must live in the City of Ashland, .Cannot be officers, agents, or employees of the local government, .Serve three-year terms that are staggered so that approximately one-third of the terms end each year, and .Can be spouses of officers, agents, or employees of the Municipality. The Budget Basis The budgets of the General Fund, special revenue funds, capital projects funds, debt service funds, trust funds, and the Parks and Recreation Department (with the exception of the Golf Course Fund) are prepared using the modified accrual method of accounting. This means that obligations of the City are budgeted as expenses when the related goods or services are available for use rather than when invoices are paid. However, revenues are recognized only when they are actually received. The enterprise funds, internal services funds, and the Golf Course Fund are accounted for using the accrual basis of accounting, under which revenues are recorded when earned and costs and expenses are recorded when the related goods and services are received or used in operations. The City of Ashland manages its finances according to generally accepted accounting principles (GAAP). During the year, expenditures and revenues are closely monitored to ensure compliance with the adopted budget and state law. Monthly budget comparisons are distributed to management. Quarterly financial reports, prepared on the budgetary basis of accounting, are distributed to the Budget Committee, the Audit Committee, and the general public. Annually, an audit is performed and filed with the State of Oregon by an independent certified public accountant. The City of Ashland publishes an annual financial report that documents the City's budgetary performance and the financial health of the City. This report compares budgeted to actual revenues and expenditures, thus documenting the City's budgetary compliance. January to April April through May June July The Budget Process Appoint Budget Officer Prepare Proposed Budget Publish Hearing Notice & Summary Hold Budget Hearing Determine Tax Levy Notify Elections Officer & Hold Election Declare Election Results Determine Tax Levy Adopt Budget & Make Appropriations --------,. I I 15-3: Days I ... I --------! --------, I I .. 5-30 Days ... I I -------..1 --, 61 Days .. If no election required --~ By June 30 1..-------------------- Submit Levy .J I & Deliver Appropriation to Assessor --"I By July 15 City of Ashland Budget Committee Meeting History Social Service Grant Subcommittee Economic & Cultural Development Grant Subcommittee Budget Message, Departmental Presentation Departmental Presentation Departmental Presentation Departmental Presentation Departmental Presentation Departmental Presentation Departmental Presentation Wrap Up and Approval, Set Tax Rate Number of Meetings *Meeting was on Saturday beginning at 8am Total Budget Meetings in hours Average per meeting (excluding Grants) The last subcommittee meetings were held in May 2000, FY 2002.03 NA 3/13,3/14 4/11 4/18 4/25 5/2 5/9 NA NA 5/16 6 FY 2003.04 FY 2004-05 FY 2005.06 FY 2006.07 3/12, 3/13 NA 3/9, 3/10 NA 3/5 5/20, 5/26 3/30, 3/31 4/5,4/6 4/24 4/29 5/2 4/20 4/26* 5/3 5/5 4/24 5/3* 5/5 5/11 4/27 NA 5/6 5/12 5/4 NA 5/12 5/16 5/10 NA NA NA 5/18 NA NA NA 5/22 5/8 5/13 5/19 5/24 4 6 6 8 13,75 2,29 15,75 3,94 11 1.83 15,5 2.58 17,25 2,16 DOCUMENTS SUBMITTED AT OCTOBER 12, 2006 STUDY SESSION .. . Q) ::::J ns > 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 - c .- o 0. ~2002-03 ____ 2003-04 - .. - 2004-05 . --)(--- 2005-06 - - -:If . - 2006-07 Budget Committee Survey Results Budget Document 4.0 4.0 4.1 3.9 4.1 _' - - _' _.......-:1:: . - . =-::.~:-.",:~-:::- .~:-~-~:.:.._:~ _:: :.... ~.-.:I( - - ~._-= =--:==___ .. Budget Process 2.6 3.3 3.8 3.5 3.7 2002-03 2003-04 2004-05 2005-06 2006-07 Presentations 3.0 3.4 3.7 3.5 4.0 Responses 5 of 14 7 of 14 7 of 14 6 of 14 6 of 13 Support 3.5 3.5 3.9 3.6 4.3 10/12/2006 City of Ashland FY 2006-2007 Budget Survey - Committee Members Budget Document Appointed Appointed Appointed Appointed Elected Elected Average Readability (Writing, flow & tone) 4 4 3 5 4 4 Appearance (Design, color, materials) 4 4 3 5 4 5 Format (Layout of pages, tables & graphs) 4 4 3 5 4 4 4.06 Budget Process Assumptions (Development and Use, Short & Long-Term) 4 2 3 5 4 5 Committee's role (Full & subcommittee) 4 2 3 5 3 4 Meetings (Quantity, scheduling, length, notification) 4 2 3 5 3 4 Minutes (Level of detail, accuracy, timeliness) 4 4 2 5 4 5 3.71 Presentations City Administrator 4 NA 3 4 4 5 Budget Officer/Finance Director 4 4 4 5 5 5 Departmental Oral (Department commentaries) 4 2 NA 4 4 3 Hand-out Materials (Additional printed info) 4 4 3 4 4 4 Statistics & data used to support budget 4 4 3 5 4 4 3,96 Support Training (Educational materials/opportunities) 4 4 3 5 4 4 Questions Answered (Staff Responsiveness) 4 5 3 5 5 5 4.25 Average 4.00 3.46 3.00 4.79 4.00 4.36 Appointed Responses 1 BUdget Document 2 Budget Process City of Ashland Budget Committee Survey Comments FY 2006-07 Amazingly well-done for a city of Ashland's size ,,_." iT .~J!lmJl'!UI!lP .JFllIlI!Wl:mu r mw-\;lW._ !~I I think the assumptions should just be listed on agendas so they are always present. The rules of order should be clear up front. The meetings are often too long to be truly effective. It seemed that corrections to the minutes were not acceptable. The approval was expected more as a formality, even when significant errors were evident. Very well organized I:l!! 1m Iml;_~.'W!l Llli!irllillT :1..'1~~~*llWWig;;;t~JlF~.~4't~~A~"llI1!Wlli!lIL_ 3 Presentations Some departments read to us what is in front of us. Police dept was unprofessional, but not surprising due to the turmoil at the time. k, 4 Support uml J 5 Change one thing 6 Additional Elected Responses 3 Presentations 5 Change one thing Some departments had outstanding presentations and materials. Others were simply adequate. -; .~ Ilua I thought all of the staff was incredible with their patience, effectiveness and stamina. Staff responsiveness excellent. Highly professional. I I U UL .m !i.1!t.."""" Lie J I.!.", _Ill I ....,;j. I would not allow so many council members on the committee. They have final review and approval and too often can drive the process. And even though this is a second suggestion, I'd develop clear, consistent application guidelines and treatment of arts, culture, and tourism grants. Add a system of numbering or lettering positions so that it is possible to know which positions are located in which departments, divisions and other sub. elements of the City's organizational chart. I'd also like to explore the possibility of adding a zero base overlay, particularly so that elements in a particular departments budget can be identified by priority. Thank you! Department Presentation uneven- some great, others (police) not so great. IJU !l:4llLl. 1 r 1 l Fewer, longer meetings Reduce time spent on irrelevant side discussion. City of Ashland FY 2006-2007 Budget Survey - Committee Members Please circle the appropriate rating, provide applicable comments, and continue on back if necessary Needs Needs Somewhat Greatly Much Some Meets Exceeds Exceeds Improvement Improvement Expectations Expectations Expectations 1 Budget Document Readability (Writing, flow & tone) 2 3 4 5 Appearance (Design, color, materials) 2 3 4 5 Format (Layout of pages, tables & graphs) 2 3 4 5 Comments: (Please provide any comments you have and be specific if you scored any category a 1, 2 or 5). 2 Budget Process Assumptions (Development and Use,Short & Long-Term) 1 2 3 4 5 Committee's role (Full & subcommittee) 1 2 3 4 5 Meetings (Quantity, scheduling, length, notification) 1 2 3 4 5 Minutes (Level of detail, accuracy, timeliness) 1 2 3 4 5 Comments: (Please provide any comments you have and be specific if you scored any category a 1, 2 or 5). 3 Presentations City Administrator 1 2 3 4 5 Budget Officer/Finance Director 1 2 3 4 5 Departmental Oral (Department commentaries) 1 2 3 4 5 Hand-out Materials (Additional printed info) 1 2 3 4 5 Statistics & data used to support budget 1 2 3 4 5 Comments: (Please provide any comments you have and be specific if you scored any category a 1, 2 or 5). 4 Support Training (Educational materials/opportunities) Questions Answered (Staff Responsiveness) 1 1 2 2 3 3 4 4 5 5 Comments: (Please provide any comments you have and be specific if you scored any category a 1, 2 or 5). (over) 5 If you could change only one thing in the Budget process, what would it be? 6 Additional Comments: ( ':, ~ CHAPTER I Sustainable Development: Prosperity Without Growth . Illl! C(()rJ()Jl1IC I}rllSl}elJrV Iequiles glo\vth seems so ITa- The assumptIOrJ I, r- r- . . ' . , , bl hI 11 ll' ,11m'! ThlllK Jl1uch aboIJt It. After all, It s what weve sona e t ,I[ IllOS I . b. . Id. 1)(lIIII' IJIlS, \'IJ\irJt'Ss ho()stt'fs, CC('loomlsts, and the media always . eerJ to 'r _ .' . . II k ~ II l-lH pr lJ1Ild ] he ;ls\umf1tJOn IS SO pervasive that vlftua]- a seem t () Ll t C"' ' _ . . I -'. I III l(lmllllllllIV 1\ j()OKlnl', for \vavs to grow out of ItS eco- yevennrncIl, - " - . .' bl ~Ol\ l'\l'II when IhllSC I}Ioblcms are themselves the result of nom1lpro t" r ufQ\vth. t' The trouble I', illl w()rd "ulowth" has tWO fundamenta]]v different ~ J meanIngs: exp,ln'itlJ1 ,Int! "dcvcloprnellt." Fxpansion meam getting big- gel: developmeJll rJJt',Hl' gl'IIJl1g hcttCf, which mayor may not involve ;xp;\llsion. This I, rJIl mcle Sl'!lLlnUC distinLtion. Many u)mmunities have wasted a lot of lIme' ,1Jlt! I'ncrgv pur\uillg exparJsion because that's what they thought thev neet!clJ, v,.hcl1 wh:n Ihev really needed was development. To avoid confusion, let'S define growth here only as getting bigger-expan- sion ~arJd t!evelopnle!1l as gett\llg hetter. Though a sound ell)fWnW requires development, including vigorous business activity, It doesn't nccessarily require cxpansiun of community size. An analogy can Ill: made with the human body. Human growth after matu- rity i.'> cancer. \Yhen a wwn continues to expand after maturity, its uncer becomes mande,r in man\' wavs: spiteful controversy, higher taxes, traffiC, sprawl, lost sense uf community. Sound familiar~ But after reachrng physical maturity, humans continue to develop in many beneficial ;lf1d interesting ways: learning new skills, gaining deeper wisdom, cultiv3Iing new relationships, and so on. Similarly, a community can develop itst'lf without necessarily expanding. It can create affordable housing, protect public safe-tv, and improve employment, health, cultural, and educational ()ppoftunities. In fact, a good definition of development is the creation of johs, income, savings, and a stronger community. This is not to ~"lY that all expansion is bad, but it's essential to distinguish it from developmellt in order to make choices that truly benefit the commul1lty. Looking for Growth in All the Wrong Places Chances are your town's current economic strategy is based on the expansion SOft of growth. lf your town is booming, the strategy probably involves riding the growth for all it's worth. If it's declining economically, the solution typically proposed will be some son of business recruitment to stimulate growth. ln either case, local boosters may use the words "growth" or "development," but what they really mean is "eXpansion": more people, ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE -j> ! , more businesses, more commercial and retail space. The emphasis is on get- ting more, instead of on doing better with what the town has already got. Sometimes, at least in the short term, doing better requires getting more. But a community that limits its development efforts to finding new busi- ness is missing opportunities and squandering local potential. Declining communities and expanding communities face different sets of challenges, but one thing they often have in common is an overreliance on expansion. I ~et's look at this in more detail. Declining Communities Business failures, loss of jobs and population, lack of opportunities for young people, deteriorating infrastructure, loss of hope... these are some of the daunting prohlems of a declining community. The local economy is probably hased on one or two salable resources such as timbel, coal, wheat, or a manufactured product. Such communities may seem prosperous until the international economy makes a slight "adjustment" and their products are no longer worth more than the cost of production. When a community's basic industry is threatened, the usual response is to call for economic development--any economic development. Local gov- ernment officials come under intense pressure to do something. Residents want to see action. Traditionally this translates into a single, cure-all strate- gy: business recruitment, which, when pursued indiscriminately, un be termed smokestack-chasing. Chambers of commerce and developmem groups across the country commonly fall victim to the siren song of husi- ness recruitment. If communities knew the odds they were facing, they \vould hroaden their approach. Each year some 25,000 economic development committees from large and small cities bid for about 500 major plant sitings-a SO-w- I ratio. To stay in the rtlnning, they must give away land, infrastructure, and tax breaks, or offer special exemptions from regulations. Jr's not uncommon for a competing government to offer an incentive package worth millions of dollars and still lose the bid. To land a new Mercedes assembly plant in 1993, the state of Alabama offered a record $200,000 worth of incentives per job created. Though lesser amounts are offered to smaller firms, very few towns or neighborhoods can play in this high-stakes league. If a community docs manage to bring in a major new business, the real- ity rarely matches the expectations. Often, promised jobs simply don't materialize. If jobs are created, they may last only a few years until the industry is offered an even bigger giveaway somewhere else, leaving behind unemployed workers and a precarious tax base. Meanwhile, incentives become a community tar baby as existing local businesses begin to demand similar breaks to remain in the community. Eventually, the hidden costS of 2 ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE f t , ! I ~ incentive p3ckages come home to roost, forcing offlcia]s to choose between higher taxes and reduced public services. Gambling 3nd "big-box" retail, the latest business-recruitment fads, pre- sent their own pitfalls. Casinos generate encouraging sales tax revenues but 31so huge demands on local infrastructure and services-especially police services. Big-box retailers rypically locate just outside town boundaries to 3void municipal taxes. Loca] businesses are quickly squeezed out by the superstore. Downtown windows are boarded up and trash piles up in door- W3)'S where, broom in hand, shopkeepers once greeted long-time customers with a friendly smile. Whether it chases smokestacks or superstores, a communiry pays anoth- er price that is impossible to measure: lost opportunities. By the time resi- dents realize they've squandered precious time and money on inappropriate recruitment efforts, years may have been lost-years when the communiry could have been pursuing more practical and sustainable development optJons. Instead of doing [he wrong thing, some declining towns, paralyzed by a communiry-wide bad attitude, do nothing at all to strengthen their economies. One town may be in denial about a plant closure: "They'll ch3nge their minds," residents say, or, "The economy is sure to turn around." Another may have realized there's a problem, but is focusing all its energy on blaming those who it believes caused the problem: the govern- ment, the company, environmentalists. Both these towns will continue to decline until they realize that revitalization can begin only when inhabitants decide to take positive action-the kinds of actions described in this book. Rapidly Expanding Communities A rush of new economic activiry can be as harmful as a decline. Some towns near a valuable natural resource suddenly become boom towns through no effort of their own. This can seem like a good thing, but all too often booms are followed by busts: a raw materia] or product may be in demand one year but out of favor the next. Worse, demand for the resource, and the profits to be made from its extraction, may encourage those in the industry to exploit it for short-term gain. Many logging and farming communities have learned to their detriment that even "renewab]e" resources like trees and soil can be depleted more rapidly than they're being renewed, undermining their long-term basis for prosperity. In other communities, quality of life fuels the expansion. They have clean air and water, little traffic, and low crime. They fee] a lot more like home than many cities. These "high-amenity" places may be resort towns or communities that are attractive to retirees and second-home buyers. They may be desirable suburbs within commuting distance of a city, or more isolated communities that attract the new wave of information busi- Anrwv _1""\1'........ ."'. ....r.................... ......... ......."..............,,- DI::.'Cl.A/A. r:lllnF ~ , , Ii L 'I ! r-- -- /'^' ~,-~" , 't~J"P '( <"\'(~r \",.- -" ___) ~~.< '\J\/( i'.:: J '\, '-Jf.'\:/' :e./", , "-.......,..' -~ :," ~~~I~;~\ (d 0 K, '~J I ,1'::- ~nJ' .~' ',.:', ,__~ J'/ .,. '- --:.-.l f ;,L >'). #'~' \ i,.:-,." - - '!- ~" ~1"1" ~I VI ~ t "",,--~k. -'~. ~.t., -.""$)"....,.,..... i ';i,'. t;T'I"'j' \,f ,? ~.; ~ k ______ ..-- ;' t\- Ji. 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A:. ~, ~).:.. f "-'" I \ ,. ~ ~ .,-' y .~~ .+~~{)- _.....,H \ ~ I~ L z.4~'''' I i;...:,r"'''" ,~ .-i . )\ -lL-_ r -'1 I .:-:-) ~~;r)~ ~o/ - I 9~_. 'r " f-l '.' 1) I fiL ",..f;:;,.;r~ ~-':'.;:-,' ' ~ ~,,--jJ, t7')/'';Y, "',- I . '.J~,-\. C(.. .,:,-.,;(,1' '~;;;Jf't / :;( I:V . ! ,,'" \' ~ ..".......... r"t ' ,,'i v ~ ,.Y,# . ' '\ t"'r'''- y,"" ( -":'.,t! I '. ~' ' .:::.< ~7 ).t. 't >1 'tJ("/ 1 ~ ~ '; , /tS(' I )', I ~-:. j i~- .... ) I ) - -" r ( ~.J .~ """:"'" -.~~ -~- ~~~,~( , " ~~. - - ----- The vicious circle of expansion hits business owners, too, nesses and individuals who do their work by telephone, fax, and modem, and therefore can live and work wherever they like. Freed by new technologies, the number of Americans seeking a safer, less complex existence is on the rise. According to Joel Kotkin of the Pacific Research Institute, "After losing population for decades, rural areas are now adding people at three times their 1980s growth rate. Between 1990 and 1994, more than 1.1 million net migrants mewed into rural areas." Kotkin calls this the "Valhalla syndrome" because migrants are "yearning for a heavenly retrear." Whatever the cause of the influx, rapid expansion-more than about a 2-percent annual increase in population-generally brings more harm than good. Communities can't seem to keep ahead of problems created by expansion in excess of this rate. Before one problem can be defined and solved, another arises, then another. They pile up and complicate one another. Local leaders are overwhelmed. Virtually every fast-expanding town plays out an unpleasant scenario. Townspeople accept almost any new proposal for expansion because they 4 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ~ _. think it will maintain a healthy economy. More people move into the area and things look pretty good. But then the side effects begin to hit home. Newcomers often take the newly created jobs and bring increasing crime, social stress, and higher housing costs. Clean air turns gray, traffic slows and snarls, parking becomes impossible, doors must be locked. Intolerance increases and respect for traditional leadership declines. In the case of high- amenity communities, traditional income sources-tourists, second-home owners, retirees who cherished the small-town character and clean environ- ment-begin to look for the next unspoiled paradise. As with any inflationary economy, rapid expansion results in a few win- ners and many losers. Many real estate professionals, big builders, heavy- equipment owners, retail property owners, and large landowners do very well; most others are caught in a spiral of inflation. But expansion is seduc- tive. The winners are very good at convincing the losers that they just need more expansion to be winners, and reassuring them that new taxes from expansion will pay for the solutions to expansion's problems. And indeed, no matter how serious the problems, each increment of expansion has attractive aspects that obscure the long-term downside. But almost invariably, the problems only worsen while taxes increase to pay for the solutions (more schools, police, fire protection, roads, human services, sewers, etc.). New revenues seldom cover the true costs of expan- sion (which include such things as the replacement or expansion of capital facilities). Since the excess costs are spread among all taxpayers, existing tax- payers unwittingly subsidize the expansion-in effect, the losers subsidize the winners. Worse, in many communities that are! experiencing sudden second-home expansion, existing taxpayers are subsidizing the well-to-do. Having bought into the growth premise, local government, businesses, and individuals all find themselves locked into a vicious circle. Local gov- ernment is forced to finance past expansion by authorizing still more expansion, which will in turn also fail to pay for itself, but on an even larg- er scale. If officials instead raise taxes, more residents are likely to join the chorus for growth, believing that it will relieve their tax burden. By this point the expansion has acquired its own momentum, because even a slight slowdown can cause serious fiscal crisis. Business owners, for their part, naturally see community growth as a fast track to higher profits. It may work out that way for some, but for others- particularly retailers-expansion attracts not only more customers but also more competitors and an upward spiral of costs: higher rents, taxes, and wages. Cash flows faster out of business people's hands. Formerly relaxed and friendly businesses become tense and frenzied. "Gone fishin'" signs fade into memory. Similarly, many individuals support expansion, assuming it will result in more and better jobs. More, yes; better, maybe; but it will also attract more Rapid expansion results in a few winners and many losers. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE i ~~ ~ J ;; ~ 1 ".\ ~ -,i ~ ~ 5 ';;,:;;z,J.:"'.x.~Vi'~'f.'";I~:;';;'~~~'2l. Expansion cannot continue indefinitely. h,c''''~'jl.C~;;'~X;;;'\J''i':b'':;&'lAf,~~';'j'i 6 1 workers, which will maintain competItIOn for jobs. Wages may increase, but probably not as fast as the cost of housing and other essentials. Residents may well find they have to work even harder just to make ends meet. Yet even though many business owners and workers are worse off than before the town expanded, they don't understand why and they call for more expansion to solve their problems. Comfortable towns seldom turn into teeming cities overnight. Rapid expansion occurs in small increments, each seemingly benign, many arguably beneficial. Cumulatively, however, the vast majority of citizens don't benefit from rapid expansion. Many communities are beginning to examine more carefully each new expansion-generating proposal to deter- mine if benefits outweigh side effects. But most just keep stumbling down the path of rapid expansion without looking where they're going. Slowly Expanding Communities Given the problems of declining and rapidly expanding communities, you might conclude that the best strategy is to chart a course somewhere between these two extremes. But while slow expansion does offer a happy medium in many respects, it is no silver bullet. A community will face most of the same problems whether it expands rapidly or slowly--the key differ- ence being that with slow expansion, the community will have more time to address them. However, no matter how gradually it proceeds, expansion cannot con- tinue indefinitely. By definition, a constant rate of expansion is exponen- tial: a mere 2-percent annual expansion rate results in a quadrupling of size in just 70 years. Sooner or later-usually sooner than we think-an expanding town, country, or species will reach the limits of its space and resources. Island residents rend to be acutely aware of these limits, but the basic principle is the same for people living on the mainland, too: the num- ber of people, buildings, roads, ete. cannot continue increasing forever. As it approaches its physical limits, even a slowly expanding community will experience the problems of rapidly expanding communities. When there's no more room to build residences ineXpensively, for example, hous- ing prices will quickly increase; when conventional means of acquiring water have been exhausted, expensive means will have to be employed. And though slow expansion theoretically allows a community more time to understand and cope with problems before they become acute, as a prac- tical matter, most communities don't begin to confront problems until they become crises. However, when a community has learned to work together using a process such as the one described in this book, it will be better able to anticipate, confront, and manage expansion problems. THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ----- EXPONENTIAL GROWTH We've accommodated our increa.sing human population by using more resources and producing more wa.stes, counting on the planet to provide whatever we want and absorb whatever we discard. Each of these factors-population, resource use, and pollution-ha.s been growing exponentially. The annual rates at which these factors are growing might sound trifling, yet the nature of exponential growth is that it compounds, like interest. Each year, the number increases by a greater amount than the year before. "When problems grow exponentially, you don't get much reaction time; they sneak up on you. Imagine a pond with a few water lilies on its surface that are doubling in number every day. Suppose it takes 30 days for the water lilies to cover the pond. On which day will they cover half the pond? Answer: the 29th day-on the 30th day they'll double again and cover the entire pond. In other words, exponential growth may not seem like a problem for a long time, then suddenly it's a major problem. In much the same way, our global resource use is growing at about 5.5 percent each year-which means it's doubling every 13 years. If that trend continues, in 2022 the human race will be con- suming four times the resources it consumed in 1996. "What's your community's annual growth rate? How long will it take to double? How long will it be before it's four times a.s big? Adapted from the newsletter of the Northwest Area Foundation (january 1996). The Viable Alternative: Sustainable Development A growing number of communities are discovering that there's an alter- native to economic "development" strategies based on expansion. They're embracing sustainable development, a more balanced approach that weighs social and environmental considerations alongside conventional economic ones. Expanding towns need not give up prosperity as they slow their expansion.. Communities with little prospect for expansion need not give up their dreams. There are plenty of development options that don't require expansIon. The term "sustainable development" would be doomed to the scrap heap of short-lived and overused buzzwords were it not rooted in a traditional value, stewardship-the careful, economical, long-term management of land, community, and resources. It's a value that some towns have recently ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 7 'fL~,:t.:;:~}J[:;ry~~t-t~t1~~-:~z..::r,j~d'.4~ When natural resources are spent like income, the economy operates like a business in liquidation. '~,2..;(,:t;t':f;&:~1'?;;;;:'t0;.;:;,,' 8 let fall by the wayside. But it's alive and well in many others, even if they don't notice it. People who care deeply about their community and who think conscientiously about the long-term implications of their actions are working for sustainability and stewardship, whether or not they use those words. When placed in front of the word "development," the word "sustainable" offers both opportunities and constraints. It offers opportunities because its new perspective reveals development options that previously weren't obvi- ous. Many such opportunities are described in the next chapter. It offers constraints because, when proposals are considered in light of their long- term effects, some options that might otherwise appear attractive are seen to be unworkable, or not worth their negative effects. Taking a long-term perspective isn't easy. For instance, it takes guts to turn down a big-box retailer, knowing that you're also saying "no" to lower prices for some products. But a few communities have done just that- because they understood that, in the long run, the local retailers would be better able to survive, keep their profits in the community, and keep their employees working. These towns have said "yes" to the long-term viability of the overall community. They chose one form of sustainability. Your choices may be quite differ- ent. There's no standard way to achieve sustainable development. Every community's situation is unique. Perhaps more important is that there is no point at which a community arrives at sustainability-it's a goal, a moving target that requires a community to continually learn about itself, its exter- nal influences, and emerging opportunities. The following interrelated guidelines will help any community move affirmatively toward sustainability. Not every guideline will be applicable everywhere. Use Renewable Resources No Faster Than They Can Be Renewed A timber town will be able to log indefinitely if it cuts timber no faster than the forest can regenerate. A farm town can remain viable only if farm- ers add nutrients to replace those removed by wind, water, and harvest (and only if the nutrients don't irreversibly pollute area water supplies). Renewable natural resources-timber, soil, quality of life, etc.-are the chief capital assets of many communities. Unsustainable communities spend these capital assets as if they were income. That's how a retail busi- ness is liquidated: tables, counters, and cash registers are sold to pay the bills. When natural resources are spent like income, the economy operates like a business in liquidation, leaving nothing for future generations. In the business world, there are often economic incentives to operate this way. For example, if the CEO of a large timber corporation is forced to THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE , , ~ choose between c1earcuning a forest to make a ] 5-percent profit or har- vesting it sustainab]y to make only 9 percent, he's likely to choose the short- term profit from c1earcuning and then move the corporation on to anoth- er forest, or even another business. Oil, mineral, grain, and other large resource-extraction industries are similarly driven by the quest for short- term return. A community whose economy is based on natural resources may find it extremely difficult to resist these corporate pressures to spend down its precious capital. Yet in the long term it can't afford not to: the cor- poration can always move on to the next forest, but the communiry can't. Use Non-Renewable Resources Understanding that Someday a Renewable Substitute Will Be Required Activities such as mining and oil drilling aren't necessarily wrong or harmful, but the fact is that they deplete finite resources. Someday the sil- ver, oil, and coal will run out (if the market doesn't make them uneconom- ic first). All towns based on the extraction of non-renewable resources must even- tually find another basis for their economy. Many have transformed them- selves into tourist towns. Others have attracted software designers, stock traders, and other entrepreneurs of the information age. Still others have evolved ]ocal economies based on arts and crafts. In general, the smart ones anticipate the shift and ensure a hospitable environment for other, more renewable economic activities well before the change takes place. Seek Ways to Strengthen the Economy Without Increasing 'Throughput' Any material process has its inputs and outputs. The sum of the materials that are processed, used, and turned into waste can be termed "throughput." Many communities think that the way to improve themselves is to increase throughput, to do more of what they're already doing-harvest more corn or trees, make more widgets, attract more tourists. Sometimes this works in the short run, but over the longer term the full social and environmental costs of these enterprises-often hidden-may outweigh their benefits. If so, increasing throughput will only dig the communiry deeper into the hole. Innovative communities and businesses create more jobs by further refining their products before exporting them out of the community. Instead of harvesting more, they "add va]ue" to what they've already har- vested; instead of making more widgets, they make better widgets; instead of wooing more tourists, they create more interesting experiences that encourage tourists to stay longer. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 9 l i 1 t Throughput can be likened t() cashflow in a business. Increasing throughput, like increasing cashflow, doesn't necessarily solve prob- lems, and it may even make them worse-we've all heard the one about the guy who was losing money on every unit. he sold, but he was "making it up in volume.;' Here's another anecdote that neatly illustrateS the problem of throughput: An enthusiastic middle manager, having been laid off from his job, buys a truck and a load of wholesale fruit and vegetables to sell out on the highway. Business is good. By the end of the day, he's sold nearly all his produce. When he gets home, he tells his wife about his successful day. When he's finished, she asks him how much he paid for the produce. Two thousand dollars, he says. And how much did he earn selling it? I don't know, he says, I haven't counted it yet. So he goes and counts the money. He COmes back and announces he earned $1,800. Hmm, his wife says, there seems to be a problem. Yeah, the man says, I need a bigger truck. 'I'M MAKING IT UP IN VOLUME'o Focus More on Getting Better, Less on Getting Bigger As mentioned earlier, a smart community looks for ways to develop itself without necessarily expanding. It understands that communities have more options than JUSt accepting another subdivision, a big-box retailer, a casino, or another industry. The next chapter highlights a number of creative alter- natives to the standard bigger-is-better approach. Seek Development that Increases Diversity and Self-Reliance It's well known that a town with several kinds of export businesses is stronger and more resilient than another with only one. With more diver- sity, fewer jobs are likely to be jeopardized at one time by fluctuations in the national or international economy. Diversity tends to come not only from big, attention-grabbing plant openings, but also from "micro-enterprises" starting up in garages, living rooms, and barns. Other things being equal, twenty new businesses with two employees each are far preferable to one new business with forty employees. Some businesses increase local self-reliance by supplying goods and ser- vices that had previously been imported into the community. Businesses 10 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE L. L that serve the local market are less vulnerable to the uncertainties of the international economy. Diversity and self-reliance are also strengthened when businesses and families save money through resource efficiency, as the next chapter wi]] show. Put Waste to Work We've grown used to throwing our waste away because "away" was always free. But in the process, we've po]]uted the land, water, and air that were so conveniently "away." ln recent years the public has demanded more strin- gent health and environmental protections, and governments now require expensive waste-disposal facilities. Meanwhile, land for disposal has become increasingly valuable, making "away" even more expensive. But waste is simply a misplaced resource. lnnovative business people and communities are finding less expensive-even profitable-ways to reuse, recycle, or biodegrade discarded materials, and they're putting people to work doing it. The motto these days is "waste equals food": the byproduct from one business or process may be useful as the raw material for anoth- er. Market forces are gradually bending the old linear path of extraction (or harvest)-production~consumption-disposal into a closed circuit, where the last step loops around to connect with the first. Many materials that once came from virgin sources are now recycled from waste, and people are now finding jobs, for example, processing discarded plastic and wood into composite building materials. Regard Quality of Life as an Essential Asset High quality of life is usua]]y good for business. Most companies looking for a place to start or move seek not only a positive business environment but a community with good schools, clean air and water, and safe and quiet streets. Many communities that have a]]owed their quality of life to be degraded have found it much harder to attract and retain good employers. Wise community leaders are realizing that quality of life and a strong sense of place aren't intangible options, they're vital assets that nurture res- idents and support the local economy. ln addition, an increasing number of community residents are willing to say out loud that development means more than business, it means preserving and enhancing a great place to live. They're saying that they want their towns to continue to be places they and their children can call home. They won't sacrifice their home for short-term gaIn . ROCKY MOUNTAIN INSTITUTE Waste is simply a misplaced resource. THE ECONOMIC RENEWAL GUIDE I I Consider the Effects of To day's Decisions on Future Generations In 1987, the United Nations Commission of Environment and Development declared that sustainable development "meets the needs of the present without compromising the ability of future generations to meet their own needs." If a community economy is based on the stewardship of such important local assets as trees or the nutrients in the soil, then future generations will be able to make a living in the same way. In contrast, economic activity that depletes resources creates a daunting future for a community's children. This concept is also sometimes referred to as "generational equity." Consider the Off-Site Effects of Decisions Many development proposals look good when analyzed only for their direct COSts and benefits. Unfortunately, most communities fail to consider all the off-site and indirect impacts. For example, the drawings for a pro- posed motel in a tourist town may look terrific. Maybe the owner is propos- ing to plant lots of trees on a formerly degraded industrial site. But a broad- er look at the proposal might disclose dramatic increases in traffic past a school or through a quiet residential area. Off-site concerns may lead the community to turn down the proposal, or they might lead to creating a bet- ter one with more appropriate access that hurts no one. Consider the Cumulative Effects of a Series of Decisions A decision may appear sound when judged in isolation, but how does it hold up when placed in the context of other decisions that are being made or have been made? Here's a real-life example. A small town in Colorado had a state highway running along its outskirts, with the local school occupying land on the near side of the highway. The owner of an undeveloped tract opposite the school proposed building a modest shopping center. On its own, the pro- posal sounded good: the stores would generate tax revenue and they'd be easy to access. The town council approved it. Later, because so many kids were dodging trathc to purchase treats at the new shopping center, the highway department decided to build a bypass a half-mile further from town. The town council then figured it would be OK to approve more commercial and residential development along the old highway, but that in turn overcrowded the school to point that the school board had to build a new one. But because expansion had helped escalate land prices, the new school had to be built on cheaper land on the far side of the bypass. As a result, students now must cross the new highway to get to it. By failing to consider the cumulative effects of decisions, local leaders only worsened the problems they were trying to solve. They didn't ask 12 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE themselves what unintended consequences might result from each "solu- tion" they chose. Measure Whether Actions Actually Do What They're Intended to Do Sustainable development views the economy, community, and environ- ment holistically; it looks at the big picture, paying careful attention to underlying causes and effects. Communities and businesses working toward sustainability therefore need to listen closely to feedback~not just the ver- bal kind, but all the various indicators of community health, trends, and cause-and-effect relationships. When weighing an idea or strategy, they should examine its direct and indirect effects, look for unintended negative consequences, and discontinue or modify it if it doesn't appear to be work- ing. When conditions change, they should alter their strategy or actions in order to achieve the same goals. This approach is often referred to as "adap- tive management." It may sound obvious, but communities, like individu- als, tend to get stuck in cenain patterns of thinking and don't always notice that their views are based on obsolete information. Consider a community that's experiencing rapid increases in housing prices. Officials conclude that the problem is insufficient supply for the demand, so they stan encouraging more housing construction. This strate- gy has the desired effect in the shon term, but after a couple of years, expansion-fueled speculation and an influx of buyers from more expensive housing markets stan driving prices up again. Delayed reactions such as this are common in complex systems like communities; it can take years or even decades to receive feedback on cenain decisions. While it's better not to create a housing boom in the first place, the community may not have been able to foresee it. The important thing is to be sensitive to the first signs that the policy might not be working, and be prepared to alter it accordingly. Where Do We Go From Here? While expansion was once seen as the only track to prosperity, the good news for both declining and expanding communities is that there is an alternative. Prosperity doesn't necessarily require expansion, it requires development that is sustainable. Though this chapter challenges common assumptions about growth, it's only a brief exploration of these ideas. The questions it raises are sufficient- ly complex to justify entire books. Those working to put sustainable devel- opment into practice soon learn that the concept can be ambiguous and even elusive. For example, if a corporation proposes a facility that hires most of its workers from outside, imposes a tax burden on community ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 13 -- If our development strategies aren't sustainable, they will be terminal. inhabitants, or endangers the quality of the ground water, most people will recognize that it's a bad idea because it can't be sustained over time to ben- efit the community. But most proposals aren't so easily judged. Often, the best a community can do is determine whether a particular proposal will move the community toward or away from sustainability. Though the answers may not be easy or clearly defined, the above guide- lines provide a general framework for approaching sustainability. The rest of this guide sets out a more specific process for incorporating sustainabil- ity into community decision-making. The controversy, uncomfortable changes, and side effects of expansion aren't confined to a few places. They're being played out in communities across the planet as the global economy touches each individual's life, as the population swells, as resources become scarcer, and as humankind's wastes (from greenhouse gases to pesticide residues to nuclear waste) exceed the planet's capacity to absorb them. It's becoming clear that if our develop- ment strategies aren't sustainable, they will be terminal. But within this crisis are substantial opportunities and solid reasons for hope. Increasing numbers of citizens in overgrown communities are unwill- ing to drown passively in someone else's prosperity. Those in declining communities are organizing to ensure a better future. Committed people are speaking out and acting for humane and sustainable development to create the kind of economy in which future generations can thrive. Increasingly, they find that others are listening. Opportunities and reasons for hope are found in the next chapter, which explores Economic Renewal as a practical way to move communities in the direction of a more sustainable future. 14 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE J..... VITAL SIGNS OF SUSTAINABILITY Once a community has decided to become more sustainable, how does it know if its efforts are working? A growing number of com- munities-including Seattle, Portland (Oregon), and Jacksonville (florida)-have devised "indicators of sustain ability" to gauge their progress, raise awareness, and develop tools for decision-makers. Though different for each community, these indicators often include such vital signs as daily traffic volume, employment, air quality, housing, literacy, biodiversity, energy use, voter turnout, land use, and recycling. Indicators aren't new-sales tax, housing starts, and per-capita income have long been used to measure what we've always called progress. Bur the new emphasis on sustainability recognizes that the old indicators offered, at best, a partial picture of a community's health. The booklet Monitoring Sustainability in Your Community (see page 221) gives tips on choosing indicators to create a more complete picture of your community's progress. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 15 .. ".- '''''~L",,,,, ~ ~" " ".'., ~,.....,," f,f " :~ (~ , , ,CHAPTER 2 An Introduction to Economic Renewal As discussed in Chapter 1; sustainable development stands in sharp con- trast to conventional, business-at-any-cost economic development strate- gies. It: ~ Redefines prosperity, weighing quality of life, community character, and the environment alongside economic considerations. ~ Seeks true development, in the sense of getting better, instead of expansion, which is merely getting bigger. ~ Advocates the long-term stewardship of community resources, ensur- ing that present actions don't erode the basis for furure prosperity. ~ Pursues self-reliance and a more democratic approach to decision- making, representing community-wide interests over those of an elite few. ~ Stresses diversity, resilience, and a conviction that many small efforts work better than a single one-size-fits-all solution. You may be saying to yourself, "Sure, sustainable development sounds like a fine idea, but how do I translate it into something useful for my own community?" This chapter answers that question. It introduces a practical way to achieve sustainability, called Economic Renewal, which has been successfully implemented in dozens of communities throughout North America. Although Economic Renewal refers to a particular process for bringing about sustainable development at the community level, it's based on set of guiding principles and tools that many communities are already using, even if they don't use the term Economic Renewal. The principles; described in the first section of this chapter, will help guide you in identifying specific projects to strengthen your community and its economy. The tools, explored in the second section, can be applied in every stage and aspect of your economic development effort. Together, they offer new perspectives on old problems, revealing opportunities that might otherwise be over- looked. The final section of the chapter gives an overview of the eight-step Economic Renewal (ER) process, which is designed to get practical results in communities experiencing real-life problems. Based on the concept of collaborative decision-making (discussed in Chapter 3), the process is an approach to community problem-solving that meaningfully involves all dif- ferent kinds of people, many of whom seldom talk to one another. With ER, they're no longer passive observers who can only briefly comment at some long, dreary public meeting. Instead, they become active participants who may even lead fun and creative problem-solving sessions. 16 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE i : --L. IlL-- To heighten your creativity, as you read about the following principles and tOols, think about how to apply each to your local situation. This moment is the beginning of your journey to a more sustainable community. Foul'" Principles of Economic Renewal Think, for a moment, about the economy of your community. What makes it work! In many ways a local economy is like a bucket that the com- munity would like to keep full. However, economic buckets invariably have holes in them. Every time someone buys something from outside the com- munity, dollars leak out. To balance the dollar drain, money must flow in from outside the local economy. Money comes in when people in other places buy products or services created by local people. Extracted raw materials, harvested crops, or manufactured gouds are "exported"; many communities also earn income from tourists and other visitors. However they do it, communities must bring in at least as much money as they spend or they will wither and die. When income falls short of outgoings, communities typically react by try- ing to recruit outside businesses-a risky and expensive strategy whose pit- falls were discussed in Chapter 1. Even if its accountS balance, a ]ocal econ- omy that's heavily reliant on only one or two industries may be vu]nerable to swings in the national or g]obal economy. To achieve greater diversity, the usual response, again, is business recruitment. Recruitment is an aTTempt to find new ways to pour more money into the community's economic bucket. Though it can be useful in many cir- cumstances, this strategy rests on the often unquestioned assumption that new business from outside the community offers the best-or the on]y- solution to loca] economic problems. Economic Renewal focuses on easier, cheaper, and Jess risky means to achieve the same end. And while this approach may Jack the fanfare and ribbon-CUTTings of a business-recruitment campaign, it typically fosters a deeper kind of community spirit and self-reliance that comes from solving problems locally instead of waiting for salvation to come from outside. The Economic Renewa] path to sustainable development is based on four principles. Although they're described separately here for clarity, in practice they're interrelated and often overlap. For instance, many things done in a community to pursue the first principle (p]ug the leaks) will assist in the second (support existing business). A smart community integrates all four, but it takes them in order, since the earlier strategies, as a rule, give ~ore bang for the buck than the later ones. Going for the surer bets first gIves a community momentum and puts it in a stronger position to reap the benefits of the subsequent strategies. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 17 Plug the leaks The lively inrerchange of commerce is an importanr part of community vitality. Your days may begin with coffee grown in Africa, Latin America , or Hawaii. You may drive to work in a car bought from Detroit, Japan, or Europe, made from metals mined in dozens of counrries. Television brings you news, culture, and SpOrts evenrs from differenr conrinents. Almost no part of your life stands alone without commerce from outside your communIty. These products of inrernational trade enrich Our lives. However, many other imports-notably such necessities as energy, food, water, health care, and housing-can often be supplied locally at no extra cost, and sometimes at a saving. In our analogy of the community bucket, these expenditures are leaks; before trying to pour more money into a leaky bucket, a town should simply plug some of its leaks. Economists call this strategy "impOrt substi- tution," but it's little more than practicing the old adage, "a penny saved is a penny earned," at the community level. Leak-plugging is an important, but all too often overlooked, economic opportunity. When a community plugs an unnecessary leak, it puts money back inro the local economy just as surely as if it had earned it through new industry. Likewise, as individual residents spend and respend the money they've saved, the local economic benefit multiplies in the same way it does with new income: more money in circula- tion creates more value, pays more wages, finances more investmenrs, and ultimately cre- ates more jobs. Unlike income, however, savings are inflation-proof-once you've cut our an expense, you no longer need to worry about its price going up. Further, money spent on local goods and services often goes to small businesses, the backbone of most local economies. In every community, many goods and services that are purchased from out of town are, or could be, produced or marketed locally. Food, for instance. A study by students and faculty of Hendrix College in Fox, Arkansas revealed that the college was buying most of its food from dis- tant suppliers, even though the majority of those food items were, or could be, produced locally. In 1987 the college changed its purchasing policy and is now committed to buying locally, and area farmers have learned how to produce for the col- lege's specific food needs. J~ J 'n I ;. i ) I , - ,/ ".", - / t.~~ ~-~Y::,."""",~",, ," A community's economy is like a leaky bucket-instead af pouring more water in, it's easier to plug some of the leaks. 18 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE Leak-plugging can turn a town's whole attitude around. For instance, in the early '90s the future looked bleak to many residents of Tropic, Utah. The timber miJJ had closed and ranching was part-time for most. Bur some made a living serving tourists visiting nearby Bryce Canyon National Park, and high school students in an entrepreneurship class noticed that tourists were buying a lot of bottled water. ln ] 995, with the help of their teacher, Kaylyn Neilson, they started producing and seJJing Bryce Canyon Mist, local spring water bottled with an attractive label depicting the national park's red and yellow cliffs rising our of the morning fog. The new product hasn't single-handedly saved the town, but it has demonstrated to residents that they can improve their local economy by replacing imports with local products. By late] 995, there was talk of Bryce Canyon beef jerky (using local beef), loJJipops, and crafts. Even when a commodity can't be produced localJy, it can often be used more efficiently to achieve the same net result. Indeed, this is probably the most reliable economic development strategy of all. Energy is a case in point. According to energy analyst Amory Lovins, a typical community spends more than 20 percent of its gross income on energy-and 80 per- cent of those dollars immediately leave the local area. Plugging this leak through efficiency is typicalJy much easier (and cheaper, as it turns our) than trying to produce more energy localJy. For example, the University of Northern Iowa spent $7,000 once in ] 994 to instalJ efficient showerheads, and is now saving $67,000 each year on water heating. Osage, Iowa (pop- ulation 3,800) plowed $7.8 million back into its local economy between ] 974 and ] 99], thanks to a series of weatherization and energy-efficiency projects that continue today through the efforts of the local utility and ser- vice groups. As a result of efficiency, ] 995 electric rates were 50 percent lower than the state average. Much of the saved money is respent locally. The untapped economic potential of energy efficiency is enormous. It has been calculated that the United States could save $200 billion worth of energy annually-and create millions of jobs in the process-simply by being as efficient as Western Europe or Japan. Since those countries aren't as energy-efficient as they could be either, the savings potential is probably much greater still. It's as if every town in America had an invisible, clean- burning, maintenance-free power plant just waiting to be hooked up to the grid. TQ promote a spirit of leak-plugging, some communities have encour- aged residents to buy locally by creating their own currency. "lthaca Hours" are a currency that "entitles bearer to receive one hour labor or its negoti- ated value in goods or services." In lthaca, New York, that's equivalent to about $] 0 an hour, the average local wage. Twelve hundred local individu- als and businesses of all kinds accept lthaca Hours, approximately 4,600 of which are in circulation. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 19 , ~ ~l i ~ ,~ .~ , ~,~ J :t" ,-i:" .'i .'!- $t; '" I ,"1',,-:, -~"':.t;;~i:';\\-;'4:~;:~-;~;1>;_;i1:'~"!!7&~'1. Caught up in the dream of industrial recruitment, communities overlook local opportunities. ,'''', '(> ~~~_:; '\:' , -ii~$:'tt~f.l;'i"S--Xtt~il~;::f.i~.iJj Of COurse it doesn't necessarily take an official program to plug a leak. Most roWns have some sorr of barrer, or "informal," economy (see page 145) that enables local goods and services to replace imporrs. While the informal economy is virrually ignored by economic-developmenr expens, its imporrance was quanrified by Shanna Ratner ofYellowood Associates in Vermont, who estimated its economic value in Crown Point, New York to be equal ro approximately 100 jobs. In a town of less than 2,000, that's a lot of jobs. Leak-plugging-through impon substitution, resource efficiency, buy- local programs, and a stronger informal economy-is an imporrant step toward greater self-reliance, and a crucial aspect of any community's devel- opment strategy in an increasingly globalized and unpredictable economy. The more efficiently resources can be used, and the more local purchases (especially necessities) can be produced locally at reasonable prices, the more resilient the local economy will be, and the more able it will be to withstand externally created shocks and changes. Support Existing Businesses The economic hearr of a community is its small businesses. Many devel- opment experrs are convinced that the fastest way to increase jobs and strengthen a community's economy is ro encourage existing businesses to become more efficient and Successful. A 1991 repon by the National Conference of State Legislatures notes that smaller businesses-those that are most likely ro starr up in your community-"while not providing the windfall of jobs promised by a Saturn planr.. .are the largest source of new job creation and tend ro be less mobile and more committed and loyal ro the... community over time and more willing ro endure economic hard times." Yet, caught up in the dream of high-tech industrial recruitment, many communities overlook local oppOrtunities. The Ithaca and Osage examples demonstrate that one way to suPPOrt existing businesses is ro plug the leaks. Irhaca Hours are a substantial incen- tive ro patronize local small businesses. And, though Osage residenrs start- ed their energy-saving effOrt to save money, they also found that lower elec- tric rates strengthened local businesses. Fox River Mills, a major employer in Osage, was able to cut its production costs by 29 perCent thanks to lower electric rates and more efficient electric morors, making possible a plant expansion that nearly tripled jobs. Though these and other innovative ideas can be powerful ways to sup- pOrt local business, any community's development effon must deal with the two most important causes of failure: inexperienced management and inad- equate financing. Federally supponed small business developmenr centers (SBDCs, see page 218) are often a big help, offering classes in such basic business skills as management and aCcounting. Central ro many communi- 20 THE ECONOMIC RENEWAL GUIDE ;'+-~ ROCKY MOUNTAIN INSTITUTE ties' developmenr efforts, SBDCs are easily accessed in colleges throughout the United States. Community development corporations (CDCs, see page 206), which lend to businesses, develop commercial and industrial space, and create housing, are also crucial to many towns. NationaJjy, there are more than 2,000 of these community-owned corporations, usually targeting services to lower-income people. An excellent example is the Mounrain Association for Community Economic Developmenr: operating statewide from Berea, Kentucky, it works on issues of forest products, micro-enrerprise, displaced workers, affordable housing, water quality, and access to local government. A CDC in Eugene, Oregon was the birthplace for a simple bur extraor- dinary idea in the early '80s. One of its board members, Alana Probst, asked ten local businesses each to list forty items purchased our of state. She then called other local businesses that might be inrerested in bidding on items from the list of 400. In its first year, "Oregon Marketplace" created ] 00 new jobs and $2.5 million in new contracts. In ] 987, this simple program blossomed into a statewide computer-based service that now matches all interested purchasers with Oregon suppliers. The concept works both at the local and state levels. Oregon Marketplace nor only boosted local businesses, in some cases it even created whole new markets. For example, an airline meal company had imported processed chickens all the way from Arkansas, despite a host of chicken growers just outside its home base in Eugene. Oregon Marketplace secured a commitmenr from the airline meal company so that a local bank would lend the growers enough money to build a processing facility. Some might suggest that Oregon Marketplace is an attempt to iso- late the area from the national economy; on the contrary, equipment for the facility, unavailable in Oregon, came from a Chicago firm that in rurn bought its steel from an Indiana company. Therefore, buying 10caJjy made Eugene a stronger trading partner in the national economy, supporting jobs in Eugene, Chicago, and Indiana. Other successful efforts to strengthen local enrerprises have focused on business networks. A bright light in the troubled wood-products industry of Washington state is WoodNet, a loose-knit network of small- to medi- um-sized wood-products manufacturers that helps members help each other. It finds markets, connects suppliers with buyers, encourages the use of waste products, pursues joinr manufacturing and purchasing opportuni- ties, creates forums for sharing business ideas, and seeks to stretch the region's dwindling wood supply. In an otherwise fiercely competitive indus- try, WoodNet members rourinely communicate with each orher, tour each other's shops, and enter inro flexible business relationships. Acting togeth- er, members reduce costs for materials, professional services, and market- ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 21 - :t-",~,~!.."€'t,~f-r':*~~;\~f/:,'i{;~n:Ji:$J;r;"';:9-???<il.<;~:>'-t Farms are businesses, too. ~_'i;,~.t~ ,',<t:\R::\:':4t:.{1i:"I<r~'i4:~;;-:V"i"1..l$-.';,:!/, ing. They gain access to larger markets by jointly manufacturing products no small firm could supply alone. The business relationships nurtured by Oregon Marketplace and WoodNet can evolve into practical "flexible manufacturing networks." In Eugene, a group of cottage manufacturers joined together to secure a con- tract to make band uniforms for a local school. Similarly, small businesses within WoodNet partner to bid on wood products contracts. Farms are businesses, too. A way to support farms that's spreading rapid- ly throughout the country is community-supported agriculture (CSA), which generates up-front capital for farmers and secures markets for their products. Farmers sell "shares" of their crops in the fall and winter, when farm income is typically lowest. For their investment, customers are assured a supply of fresh fruits and vegetables. Everyone benefits: the farmers get winter cash, consumers get summer discounts, and the community strengthens its local food supply and agricultural economy. In addition, members share in the satisfaction, as well as the risks, of agriculture. Rural Action, an Ohio-based nonprofit organization, found that ranchers partic- ipating in this approach to agriculture made at least $1,000 more per ani- mal by processing and selling their livestock themselves. Another source of support for family farming is community land trusts. Communities use CLTs to preserve the availability and affordability of land to low-income residents, farmers, and others to whom rising property values can mean dislocation or bankruptcy. One example is the Wisconsin Farmland Trust, which helps farmers withstand development pressures, encourages stewardship of the land, invigorates local agriculture activity, and stimulates farmer-to-farmer cooperation. City-dwellers are also taking action to supporr eXIstIng business. According to the publication ZPG Reporter, residents of Washington, DC's Marshall Heights neighborhood decided in the early 1980s to do some- thing to stem the exodus of neighborhood businesses. They conducted a study that showed retailers how much pent-up purchasing power existed in the area, then persuaded the DC government to pave their unpaved and gravel streets. They established the Marshall Heights Community Development Organization, which now provides a 90,000-square-foot space for starr-up businesses and co-manages a shopping center that it bought and renovated. Which brings us ro the third principle of Economic Renewal.. . Encourage New Local Enterprise In any dynamic economy, businesses are constantly folding and being created. In most communi ties this process goes largely unnoticed unless business failures outnumber start-ups. However, your community can do a 22 THE ECONOMIC RENEWAL GUIDE ~ ROCKY MOUNTAIN INSTITUTE , I , j I , I I lOT ro tip the balance roward success by encouraging new local enterprise. Pursuing the previous TWO steps will lay a firm foundation for this effon. They creaTe an exciting business climaTe: a rown That's plugging leaks and supponing exisTing businesses is a greaT place ro stan a new one. And plug- ging leaks will often lead auromaTically ro opponunities for creaTing new businesses-such as The waTer-bonling plant in Tropic, Utah, mentioned earlier. Many communities whose indUSTries are based on limited resources can create new businesses and jobs by adding more value ro the products they expon. A classic example is the logging rown with its own timber mill: by shipping milled lumber instead of raw logs, the rown creates more jobs per trees cut down than a rown without a mill. Some Troubled logging com- munities are taking this concept a step funher by processing milled lumber funher into furniture or other finished goods, thus supponing even more jobs with a limited resource base. Whether the resource is timber, grain, cattle, or coal, adding value is a powerful sTrategy for stimulating a local economy. A group of organic farm- ers in Saskatchewan has harnessed this principle both ro suppon their own businesses and create a new one. ln ] 995, in a project that grew out of their panicipation in Economic Renewal, they built a facility ro process their grain products instead of shipping them unprocessed. Similarly, corn farm- ers in Marshall, Minnesota, formed a co-op in the] 980s that built a plant ro process local grain into syrups, oils, and meal. Another well-tested method for encouraging new local enterprise is the business incubaror. Developed by private businesses, local governments, and colleges and universities, these facilities vary widely from place to place, but generally provide affordable (sometimes subsidized) space, business ser- vices, and consulting under one roof. A typical incubaror is a cluster of small offices or shops around central secretarial and computer services. Businesses are often required ro move on to other conventional space after a specified period of time. Encouraging new business activity often requires creative financing. For example, many local stan-ups are so small or risky that conventional banks won't lend to them. Based on the overwhelming success of "micro-enter- prise" loan funds in developing countries, the Good Faith Community Loan Fund of Pine Bluff, Arkansas, was created by a public-spirited foun- dation to provide financing ro very small local businesses. Because the mostly low-income borrowers stand little chance of gening conventional bank loans for their fledgling businesses, the nonprofit fund is putting needed money behind self-employment and new economic activity in depressed regions of rural Arkansas. Some communities are developing their own creative ways to finance local enterprise. Residents of Oberlin, Kansas gathered risk capital from ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 23 ~".,: L:~~..~,,-~,. .... , , ;,1 ,J ';1 i , ; ~ I% !~ i1 n ,/ Il ~ ,. I. :;-, 1;; ;~l . ;c,"':';.t..&X_~i1.;l Having pursued the first two steps, you'll be in a better position to recruit new business. '.",', ". current and past residents at no more than $1,000 per person-very patient capital that no one expected to get back-and invested in a feedlot, which later went private, Ivanhoe, Virginia sells deeds to square feet of land in a town park to raise money for sustainable development projects, They have land owners from all over the world! The project creates community pride, develops community capacity, and raises money. Mter establishing Oregon Marketplace (see page 21), Alana Probst moved on to yet another groundbreaking idea, helping found the ShoreTrust Trading Group in 1995. The nonprofit organization offers busi- ness support, marketing assistance, and high-risk, non-bank credit to busi- nesses in the lower Columbia River region that reduce waste, save energy, limit chemicals use, add value locally, or improve fishing, farming, and forestry practices. A more exhaustive discussion of community development financing mechanisms is given on page 205. Recruit Compatible New Business Having pursued the first three steps, your town will be in a much better position to recruit new business. A community that's plugging leaks, sup- porting existing business, and encouraging new local enterprises won't be desperate for any economic activity, regardless of the harm it may cause. Businesses looking to relocate will be more attracted to a community with vibrant local enterprise and a high quality of life. Government agencies and foundations will also be more likely to direct their resources toward a com- munity that's working hard to improve itself. Business recruitment can bring significant rewards, especially if under- taken in a sophisticated way. It can attract new enterprises to develop underurilized resources and meet needs unfulfilled by existing businesses. Incoming companies can bring fresh capital, new jobs, economies of scale, technical expertise, and participation in national or international networks. If these characteristics complement local resources, the new company can bring renewed vigor to your community. However, as eXplained in Chapter 1, business recruitment pursued with- OUt regard for community and environmental values can also create serious problems that outweigh benefits. Many communities have sought new industry at any COSt, believing that any economic expansion is better than none. However, a community should add up whether a proposed new busi- ness will bring a net benefit. Will the advantages outweigh the costs? Will it be compatible with the community's goals? Residents of sleepy Cripple Creek, Colorado, assumed nothing but benefits would accrue from the gambling casinos that moved into town in 1993. Many spent a lot of per- sonal time and money to ensure success of a state ballot question to allow gambling in their town. Within two years, demands for new public services 24 THE ECONOMIC RENEWAL GUIDE ~~, ROCKY MOUNTAIN INSTITUTE ---oIIlIIII to the new industry had resulted in a 350-percent increase in property taxes, forcing many residents to leave their own community. If you decide to offer incentives to entice a new business to relocate to your town, understand that they usually don't work and often backfire (see page 2). Incentives should play only a limited role within a larger develop- ment effort. They should be used very cautiously, only with strict safe- guards in place, and only when there are solid guarantees of net new jobs. A cautious approach is the most cost-effective way to attract new busi- ness. By choosing the most promising and compatible development for your community, you'll be able to take your best shot at a range of possi- bilities, and make the best use of limited resources and time. Where indus- trial recruitment seems appropriate, make it work on your terms. A respon- sible company will be confident moving to a place where community val- ues and goals are clearly stated, and local government and businesses col- laborate to achieve those goals. It won't mind firm local rules if they're clear- ly stated and fairly enforced. Taken together, these four principles offer an important message to every community: do better with what you have, instead of seeking "saviors" from outside the community such as footloose companies and government programs. It's not unlike the advice you might offer a good friend who's having problems at work or home. You might say, "Don't expect them to change-work on yourself." Similarly, a community that attempts to strengthen itself by knocking on government and corporate-boardroom doors would be well advised to acknowledge its weaknesses, work to change them, and build on its strengths. Whatever direction your community chooses, taking care of what you already have will give your economy the strength to multiply the benefits of any later economic development. Nine Tools of Economic Renewal The preceding four principles are the foundation of a smart communi- ty's development efforts-they offer a framework for thinking about how to approach development sustainably. But case studies of successful com- munity development effortS compiled by Rocky Mountain Institute reveal a number of other specific tools you can employ as your community con- siders ways to strengthen itself. Ask Why In any community development effort, one of your most important tools is the question "why." Asking why helps strip away unfounded assumptions and establish what's really needed. It shifts the focus from particular pro- posals, which may divide the community by appealing to entrenched posi- ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 25 ,~.'F(.;,~:.'r':;~i;i~'t-;:ffl,,0}ilt{:€';i!:,'~-r'''j4l;.';~~~i''l:.kl Old assumptions blind communities to new opportunities. tions, to the underlying goals that unite the community. Having asked why, you can then choose the best way to achieve those goals rather than nar- rowly focusing on one-size-fits-all solutions. This simple technique helps identify the most creative, sensible solutions to community problems. It can be applied to virtually any issue. For instance, during one community's meeting on development, one partici- pant repeatedly insisted that the community needed a big arch over Main Street. Though most participants rolled their eyes or ignored his idea, someone finally asked why he wanted the arch. "We have no pride," he said. "We need something to make people feel good about this communi- ty." Another participant said, "I agree, we need to build our sense of com- munity. So let's say that's what we need to do. Maybe then we can find addi- tional ways to build pride, including the arch." The second participant illustrated the point: when discussing a possible solution, ask why it's being considered. Maybe it's only one of several pos- sibilities. Others may be more attractive, less controversial, and less expen- sive. One may appeal to the whole community, including the guy who wanted the arch. Asking why can help reveal alternative paths through many thorny dilemmas. Struggling with economic problems, many earnest town leaders assume that a new industry is the solution. If they discover later that their chosen new industry will cause big problems, they may forge ahead anyway, blinded by their original assumption. But when an assumption leads to a painful conclusion, the sensible response is to question it: Why new indus- try? The answer may be increased income, more jobs, or more savings. New industry is only one of many ways to fulfill these needs. Assumptions about how to achieve the community's goals are very differ- ent from the values that underlie those goals. Therefore, challenging the assumptions doesn't threaten community values. On the contrary, it's the most effective way to achieve the goals that suPPOrt the community's values. Old assumptions blind cOI....nunities to new opportunities. As your community's development effort proceeds, notice and respectfully question the assumptions-your own as well as others'-that underlie par- ticular ideas. Are they limiting the community's possibilities? Are they lead- ing the community down an unwise path? Continually asking why will expose limiting or damaging assumptions and clear the way for more pro- ductive problem-solving. Manage Demand The conventional response to running out of something is to look for more of it. For instance, facing burgeoning demand in the 19805, many electric utilities invested in new power plants. They assumed that con- 26 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE I I I I I I 1 I I I I ! I ~ sumers would pay for this new supply, whatever it cost. But the new power plants were so expensive that electric rates soared. In response, consumers reduced their demand, eventuaJ]y bankrupting several major utilities. Such "supply-side" solutions often overlook the true nature of demand. It isn't electricity that people want, it's the services that electricity makes possible: refrigeration, lighting, hot water, home heating. But it's typicaJ]y cheaper to find more efficient ways to provide these services than simply to increase the supply of electricity. That's why utilities like the one in Osage, Iowa (see page 19) have learned that they can often meet Customer demand more effectively by investing in weatherization and appliance-rebate pro- grams rather than in new power plants. It sounds counterintuitive, but the utility can acruaJ]y make more profit by paying its customers to use less of its product. The customers, for their part, stiJ] have hot showers, cold beer, and so on-and they have more money left over, which filters back into the local economy. The solutions to many problems are often far less expensive when they address demand rather than simply adding new supply. "Demand manage- ment," as this approach is caJ]ed, starts by asking what job the user wants done, and then determining the most efficient way to do it. It usuaJ]y turns Out that no kind of new supply can compete with the more efficient use of what you've already got. Some community organizations have found they can playa vital-and lucrative-role in managing demand. In Southern California, for example, a group caJ]ed the Mothers of East Los Angeles teamed up with water util- ities to implement a toilet rebate program. The utilities were wi]]ing to pay Customers $100 to trade in their old toilets for new, water-saving models, but the program was failing in low-income neighborhoods because many residents simply couldn't afford to sheJ] out $100 and wait weeks to be reimbursed. The "Mothers," backed by a private consulting firm, bought the new toilets up-front, hired local people to instaJ] them, recouped their expenses with the utility rebate, and had money left over to fund a child- care program. The utilities saved money on distribution costs in the long run, and residents who took advantage of the offer benefited from lower water biJ]s. Demand-management solutions are not only better for the economy, they're better for the environment. For example, some cities are realizing that widening roads and highways doesn't solve traffic problems. "Traffic demand management" programs, such as ride-sharing, can accomplish the same objective much more cheaply. Lester Prairie, Minnesota reduces demand on roadways while supporting local businesses with "Rideshare Bucks," which commuters earn by giving rides to feJ]ow residents. Funded by a state energy grant, the bucks can be redeemed at local retail outlets. In the program's first two years, Lester Prairie commuters saved $600,000 in 1l0CKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 27 ... Small solutions are more flexible, less expensive, and more manageable. travel and fuel costs (and in the process prevented 100 tons of carbon diox- ide from polluting the atmosphere). Pursue Development, Not Necessarily Expansion As discussed in Chapter 1, growth and development aren't the same. Growth, in the sense of expansion, is an increase in quantity, while devel- opment is an increase in quality. This distinction is particularly important to the many communities that are learning the hard way that growth is not the solution to their economic woes. While they enjoy the benefits of growth, they're also vexed by the problems it causes: higher taxes, traffic congestion, crime, long commutes, air pollution, increasing intolerance, disrespect for traditional leadership, increasingly cutthroat business compe- ti tion, higher rents, housing shortages, spiraling costs, and demands for higher wages to meet the higher cost of living. Fortunately, communities have many opportunities to develop that don't require them to get bigger. They can create jobs, increase income, improve conditions, save money, and provide opportunities for subsistence (non- cash) activities-all of which strengthen the local economy without neces- sarily requiring its expansion. It's true that expansion creates jobs in a com- munity; but sustainable development puts people to work, too, without the problems often associated with physical expansion. Successful communities confronting important decisions about pro- posed development should ask hard questions: Is this particular kind of development sustainable? Is it something that will support or detract from the ability of our grandchildren to make a living? Will it create problems that the community cannot adequately deal with? Is it compatible with the traditional values of the community? Sustainability can be difficult to deter- mine. Some development ideas are clearly unsustainable; others are less clear. However, it's worth asking questions early to save yourself the grief of unintended consequences. Seek Small Solutions Communities with big problems often seek big solutions. But the bigger the solution, the harder it is to pull off, and the greater the risks. When a community puts all its eggs in one basket and someone drops the basket, the community's development effort cracks. Consider the community that puts its hopes in attracting a particular industry. It usually takes a couple of years before the new company makes the final decision to move in. As time passes, unhappy news may come to light. Local leaders hear that the new company will buy (in some cases, take) water from local farmers. "That's unfortunate, but we need new industry," say the overburdened leaders. Then they discover that the indus- try can't afford to avoid dumping chemical effluents that may seep into the 28 THE ECONOMIC RENEWAL GUIDE i::l::.a.... ROCKY MOUNTAIN INSTITUTE J --. around water. Leaders, who have already committed themselves beyond the b point of no rerum, say, "There's no proof that it'll end up in the ground water and, anyway, we need the jobs." Later, distressing news: the compa- ny will import most of its workers. "Well," say local leaders, "that's too bad, but we're committed now." In contrast, small solutions are usually more flexible, less expensive, and more manageable than large ones. When a community embarks on a diverse effort that includes many small projects, each of which can produce results, then the potential for success is high. ]f a few projects turn out to be duds, no problem. Others will succeed, making the overall effort a suc- cess- the kind of success that builds toward a better future. ]n 1995-96, Snowflake, Arizona used the Economic Renewal process to select several projects intended to strengthen the community: historic tours for tourists, business education and mentoring, and niche marketing and cooperation among local farmers. Even if one of these projects doesn't suc- ceed, others will thrive and provide a big win for Snowflake. Better, each of Snowflake's three projects is diverse by itself. Some parts can fail while oth- ers flourish. ]f Snowflake instead had sought one big solution, it could have netted one big failure. By pursuing many solutions, its strategy was resilient and durable. This is not so say that your community shouldn't attempt a large project-just don't rely on that big project as the sole basis for your com- munity's success. Find Problem-Solvers Who Care Many communities pursuing development seek saviors-a big corpora- tion, government, or maybe a foundation-someone from outside the community who'll wave a magic money wand and save the community from disaster. It may happen. But the success of this approach depends entirely on an important decision made by people with no direct stake in the communi- ty. They may be terrific people who love their children, but their personal goals probably don't include ensuring the success of your community. They've got other responsibilities, other needs, other demands on them. Entrusting your community's future to such disinterested outsiders is like- ly to lead to delay, disappointment, and an unacceptable loss of control over the Outcome. This not to say that a community shouldn't fully use outside resources; on the Contrary, an effective development strategy taps outside resources. But don't rely on them for your sole support. Depending on outsiders is Worse than putting all your eggs in one basket-it's handing the basket to someone who doesn't care if the eggs break. The people who found and provided the fledgling solutions in Tropic, Utah (see page 19) lived there and by all accounts cared about the com- ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 29 ~;'..,., ~...;"" '~ L munity. All understood that a stronger local economy was in their inter- est-they didn't need to be altruistic to understand that the community's success would make them more successful. When looking for problem-solvers, don't overlook local business people. They, as much as anybody, have an interest in seeing your community thrive. Many care so much about the community that they started a busi- ness to remain in it. They're in it for the long haul. In contrast, outside businesses might be induced to move in, but they'll move out just as easily if they're offered a better deal elsewhere. Locals don't move to Asia to save labor costs. Increase the 'Multiplier Effect' When a dollar enters a community and is then spent outside the com- munity, its benefit is felt only once. If that same dollar is respent within the community, its benefit is multiplied: it adds more value, pays more wages, finances more investments, and ultimately creates more jobs. Thanks to this "multiplier effect," each additional transaction in which the dollar is involved creates just as much wealth as a new dollar from the outside, but relies on local decisions made by people who care about the community. Let's say you sell your particular product outside the community (or you provide a service to a visitor from outside the community) and receive new dollars for it. After you pay your business's operating costs, you spend some of your new dollars to buy a jacket from a catalog. A tiny fraction of your expenditure rerurns to the community to pay the driver or postal worker who delivers the jacket. If you buy the jacket from a local factory outlet or superstore, more of your dollars return to pay salaries of the store's staff. But if you buy the jacket from a locally owned dry goods store, even more of your dollars stay in the community. Its owners spend some of their profits and a much larger share of their operating costs locally. They may even buy one of your products. It's unlikely the superstore owners or the catalog company would do the same. The greatest multiplier effect, and thus the greatest benefit to the community, is achieved when you buy the jacket from a locally owned business that made the jacket itself. Your community can increase its multiplier effect by plugging leaks, sup- porting existing businesses, and creating new local businesses-especially if those new businesses supply locals with things that had previously been imported. Find Hidden Local Skills and Assets Colquitt, Georgia was a community that appeared to have nothing much to work with. In fact, it had an asset whose importance had, for a long time, gone unrecognized. The mayhaw berry had grown around Colquitt since before the town was settled, but no one thought of it as having any "eco- 3 0 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ~. I ! I I ! I ! i I , I 1 I \ i ------IlIIII ........- nomic development" value. They thought of the berry simply as something that families canned for their own use. But one autumn, a small group of creative women canned more mayhaw jelly than their families could eat. They made labels and tried selling small jars of the jelly to specialty stores. The stores thought the product was great and wanted more. The women created a business that went on to employ SO people who prepared mayhaw jelly and a dozen other products for sale in 36 states. The women of Colquitt put to work an asset that was literally growing on trees. Though the mayhaw business has since been purchased and moved to another town, it demonstrated that virtually every community has some unique asset or skill that can be put to work creating wealth. It could be a raw material, a recreational opportunity, perhaps a traditional craft or a historical affinity for a certain industry. Hidden opportunities can even be found in waste: in Rifle, Colorado and Hazleton, Pennsylvania, huge greenhouses are kept warm with the waste heat from local power plants. The trick is to examine your community with a fresh eye. What asset or skill is hidden in your community? As you consider this question, think beyond those that are literally hidden. Opportunities may be right there for everyone to see but waiting for someone like you to rec- ognize and put to work. After all, some of the best ideas are those that, once you hear them, seem obvious. Build Social Capital A community's most important strength is the capacity of its people to work together for the common good. This capacity is often referred to as "social capitaL" Like more conventional forms of capital, it's essential to successful development. Unlike other forms of capital, the more you give away, the more you get back. According to Harvard political scientist Robert Putnam, social capitaJ is indicated by such things as voter turnout, newspaper readership, participa- tion in community decision-making, and membership in arts, Sports, and service organizations. Many people regard these things as not very impor- tant, just something you do because it's fun or necessary. But Putnam's twenty-odd years of research indicates that each of these activities is an impOrtant thread in the fabric of a community. The stronger the fabric, the better residents feel about living there, and the better a place it is in which to do business. In other words, a community's economic success is based on its social capital rather than the other way around. Towns succeed because they're communities, not just collections of buildings and people. This is nor to say that residents all agree with one a~other. On the contrary, they have important disagreements, but they deaJ With those disagreements in a civil way. They solve problems instead of ROCKY MOUNTAIN INSTITUTE A community's most important strength is the capacity of its people to work together. THE ECONOMIC RENEWAL GUIDE 3 I J Pl: attacking one another. They know that they can't just sit back and wait for prosperity; they must work together to seize it. Successful communities have committed volunteers who serve in many ways, some organized, some quietly individualistic. They have lots of orga- nizations, meetings, events, festivals, and parties. There's not a night in the week that something isn't going on. Though one of these activities alone may seem insignificant, together they create the foundation for a commu- nity and its economy. Successful development can result from one person's great idea, but a community that sits back and waits for that person to come forward is like- ly to drift in complacency, hoping things will get better. In contrast, a proactive community sails to success by gathering residents to examine where the community wants to go and how best to get there. That gather- ing is the place where many ideas, including that one person's great idea, can be offered, considered, and improved upon. This guide will help you involve your community's inhabitants in a development effort. Chapter 3 in particular offers more ideas about how to develop social capital. At each step in the Economic Renewal process, you'll add another building block of social capital to serve as the foundation upon which your community will succeed. Organize Regionally Though prosperity for your own community must be the ultimate aim of your development effort, your community is not an island. Taken too far, community-centeredness can crush creativity ("We're gonna do it this way because we've always done it this way"), provoke petty rivalries with neigh- boring towns or neighborhoods, or, worse, cause residents to retreat into narrow-minded hostility toward anyone from the outside. Just as your family needs the community, the community needs its con- nections to neighboring towns, the region, the nation, and the world. The human scale of a community-which is its strength on a social level-can make for limited economic options and few opportunities to make business connections. A smart development effort looks for ways to tie in more fully to the regional economy. Regional cooperation may take many forms. Perhaps the most common is the regional development organization, formed by neighboring rural towns to provide staff support and assistance for members. These partner- ships may be public (local governments), private (for example, chambers of commerce), or both. Leaders from twenty isolated and fiercely independent towns in the far-flung Alexander Archipelago of Alaska created the Southeast Conference in 1956 to start a ferry system that today is essential to the region's commerce. In other cases, businesses may lead the way by initiating cooperative marketing to regional urban centers. Organic farmers 32 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ~." ,:1 I .~ I .. I c <~j I i J "' I ! I I i I ! I I i I I .....l -; in Saskatchewan (see page 23) reached beyond their individual communi- ties to other farmers over a wide region to build a cooperative processing facility for their products. In ] 993, the Arkansas Rural Enterprise Center created WoodWorks, Inc., which markets Arkansas wood products to sup- port businesses, create jobs, and promote sustainable forestry practices. The center helps wood-products businesses of all sizes work together and make sales regardless of what town they're in. The result is stronger, more diver- sified towns. WHEN TO DO ER The timing of your Economic Renewal effort is crucial to its suc- cess. Choosing the right time to start requires intuition and a knowl- edge of the inner workings of the community. In general, though, a community is probably ready to work toward bettering itself when one or more of the following conditions exist: ~ Residents recognize that something must be done and no one else is doing it. ~ A crisis (e.g., a natural disaster, closure of a major business) brings the community together. ~ A few people have begun talking seriously about organizing some effort to seek a better future. Where a few are acting, many others are thinking. ~ One or more people are committed to take action. It will be more difficult to conduct ER when there is: ~ Overwhelming apathy or lack of recognition that something should be done. > A belief that something is coming that will save the town: "We don't need to do anything, we'll just wait till..." ~ A crisis so deeply divides the community that people on opposing sides of the issue can't be in the same room . together. Though these are useful thoughts about timing, don't regard them as rules. Many communities have achieved success despite apparently bad timing. Some have accomplished results even in the face of ram- pant controversy. Others that appeared to be drifting aimlessly have taken dramatic action to improve themselves. Even a relatively apa- thetic community can be galvanized to action by a few credible and assertive people. However, your effort will have the best potential for getting off to a good start when at least one influential resident is actively enthusiastic about the idea. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 33 iii~u.. ~ Eight Steps to Economic Renewal Economic Renewal is a process by which community residents from all walks of life work together to find and develop projects to strengthen their community and its economy. With the exception of the first preparatory step, it's a series of town meetings, each designed to build on the results of the previous session. At first, this community-based approach may appear long and cumbersome, but because it develops sound decisions, builds trust, and diminishes opposition, it saves time in the long run. The Economic Renewal process is carried out by a small team of resi- dents with the help of larger group of volunteers and sometimes a profes- sional facilitator. While many factors can affect the length of time required to organize and conduct the eight-step process, most communities find it takes two to six months. The process culminates with the development of project action plans; actually carrying out the chosen projects, which is beyo!ld the scope of this book, can take as little as a few weeks or as long as several years, depending on their size and complexity. The number of par- ticipants in the process varies widely from town to town, from as few as 25 to more than 200. Each of the eight steps summarized below is the subject of a complete chapter later in this guide. Step I: Mobilize the Community The first step in the ER process is to mobilize a broad cross-section of community residents to participate in the rest of the process. This prelimi- nary step is arguably the most important of all because, unless it's done well, the rest of the process may not be worth doing. 1 f an important decision that will shape a community's future is made by an elite group of insiders or by Outside experts, community residents who are left out may not stand for it. The result can be delay, distrust, COntroversy, litigation, or inaction. In contrast, when decisions are developed by all different kinds of people in the community, they're likely to enjoy broad suPPOrt. Mobilization usually stans with a small group of people who, having decided that ER sounds appropriate and worth pursuing, schedule the first town meeting (Step 2) and try to generate as much interest in it as possi- ble. This is done in a systematic manner, initially by personally contacting representatives of every organization and interest group in the community, whether official or not. Every possible viewpoint should be represented, including those that are typically ignored in local public processes. Having enlisted the suPPOrt of key representatives, organizers publicize the process and the upcoming meeting through media announcements and, optional- ly, special presentations. 34 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ---- ..lo.... Step 2: Envision the Community's Future This is the flrst town meeting of the Economic Renewal process. It assembles residents who use worksheets to identify their values, goals, and perceptions, and from them project the community's "preferred future." The effect of this exercise is to itemize what the community wants to pre- serve and what it wants to create anew. Unlike many economic develop- ment efforts that begin with a narrow focus on jobs and business, this meet- ing gives participants the opportunity to say what's important to them. They're assured that these things, in addition to business and jobs, will be the basis for the community's development effort. In the course of discussing what they care about, participants often are amazed that others-even people they regard as adversaries-value most of the same things. This realization begins to build the trust that's crucial to the success of the program. The information generated by this session is useful later on when, in Step 6, participants refer back to the preferred future to ensure that prospective projects are compatible with it. Because many people who attend this flrst meeting haven't been thor- oughly briefed on the ideas of Economic Renewal, the session usually includes an introduction to sustainable development, the ER process, and the people who are conducting it. Step 3: Identify What You Have to Work With The serious work begins with this meeting, in which participants inven- tory the community and its economy. This provides a sound and factual basis for the community's subseguent development effort. Without it, many opportunities would be lost. Participants break up into smaller groups to discuss seven important aspects, or factors, of the local economy: business environment, access to capital, infrastructure, guality of life, the informal economy, natural resources, and human resources. Each group then itemizes community problems, needs, and assets specific to its factor. The product of the ses- sion-worksheets listing problems, needs, and assets-becomes the raw data for the next step. If available, other economic and demographic data can be offered at this point in the process. Step 4: Discover New Opportunities Now the community's inventory from Step 3 is displayed so that every- one can see it as a whole and find opportunities that might otherwise be obscure or hidden among innumerable everyday details. Prior to the meet- ing, the Step 3 worksheets are transcribed onto large sheets of paper and attached to the walls of a large meeting space such as a high-school gym. The visual effect is a huge map of community conditions. The task is to make connections-literally-between community problems, needs, and assets. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 35 ., In addition ro being challenging and creative, this exercise is also fun: lots of people milling around in front of the lists, pointing at items, com- paring notes, and making connections. In the course of the evening, par- ticipants list dozens or even hundreds of actions that might be pursued ro strengthen the community. Step 5: Generate Project Ideas Freewheeling and creative, this step concentrates on identifYing more projects the community might pursue to strengthen itself. Participants brainstorm project ideas based on what they learned in Step 4 and on ideas gleaned from case studies of other towns. Some communities find they've already generated so many project ideas that they need very little time to complete this step, and are able to com- bine it in the same meeting with Step 6. Step 6: Evaluate Project Ideas Steps 4 and 5 generate more project ideas than any community can deal with. Many will be impractical, incompatible with the community, or too difficult or risky. The worksheets employed in this step provide a frame- work for evaluating how well project ideas fit the community's needs. Participants form committees to evaluate project ideas. Each committee starts by clarifYing and adding details ro the idea, which may originally have been stated in general or vague terms, then evaluates the idea for its practi- cality, sustainability, compatibility with the community's preferred future, and other appropriate criteria. Projects that aren't chosen for evaluation are set aside for future consideration. Step 7: Select Project Ideas Though Step 6 reduces the number of prospective projects, there usual- ly remain too many ideas for the community to implement at once. In this step, participants compare project ideas to one another to select the few that are most promising for the community at this time. Depending on the number of project ideas, this step may require more than one meeting. Committees present the results of their project evaluations, which, tem- pered by comments from all participants, are summarized on a wall-sized "project menu." When the presentations have all been made and the pro- ject menu filled in, participants discuss the comparative merits of each pro- ject and agree by consensus which projects should proceed. Finally, participants form project development committees and a com- mittee ro create a permanent organization to carryon the Economic Renewal work after Step 8. 36 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ~ Step 8: Develop Project Action Plans This final step is ;) bridge from the Economic Renewal process to specif- ic project implementation. It begins with a public meeting, which ensures that the committees get off on the right foot, but after that they work inde- pendently. The committees' task is to create a written action plan for each project. ]n the process of developing their plans, they'll refine project concepts, recruit technical assistance, analyze alternatives, identify barriers to implementa- tion, create budgets, secure financial support, and deal with resistance. THE MEASURE OF ER'S SUCCESS The outcome of the Economic Renewal process will be a few realistic projects chosen by participants-projects that will build toward a more sus- tainable future. Because many residents will have participated in selecting the projects, or at least followed and understood the process, they'll feel some ownership in and commitment to them. To enhance community sup- port and enthusiasm, participants will choose at least one project that can be implemented quickJy and easily to achieve a short-term, measurable success. Many community residents and leaders, especially those who participat- ed, will better understand the community economy; they'll be more com- fortable with economic development. Participants will have experienced a genuinely collaborative process, which, if your community is like most, will be much more creative and less contentious than the usual ways of getting things done. They'll better understand each other and be more willing to work together. This experience may lead to more effective decisions in the future. Each community that has used Economic Renewal has created and cho- sen development ideas compatible with its particular circumstances. A few examples: >- Alamosa, Colorado. Residents dramatically revitalized their down- town, launched alternative crop and fish-farming initiatives, started a community recreation program, conducted a business-needs analy- sis, planned a community/conference center, and instituted a flood- control program that saves $115,000 in insurance each year. Moreover, Economic Renewal "helped bring the town together" and "fired up the people," according to town manager Mike Hackett. >- Kentucky. The Mountain Association for Community Economic Development used Economic Renewal in three economically dis- tressed counties. Participants selected a variety of development pro- jects including a farmer's market, a co-op art gallery, a tourism com- ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 37 .] .~ ,,1 '; l , J f ;i ;~ f~ ,':; t~ \~ r~ : ~ I! '-" , :j- l _.1 'c. ri '5 il \~ r i ! 1" mirree, a small-business assistance effort, a value-added wood prod- ucts business, and downtown improvements. > Plateau Valley, Colorado. Residents of this rural area started a local newspaper, upgraded their fairground, and inventoried historic structures, and are now investigating alternative local crops. > Snowflake, Arizona. Economic Renewal participants decided to suPPOrt local business with a mentoring program, improve tourism by training local tour guides, and support local farmers with a co-op for specialty produce. > Saskatchewan, Canada. Farmers built a value-added processing facility and started a marketing campaign for their organic products. Some people may shrug off these successes as flukes, or assume that they resulted from some lucky break. However, though each received some help from the outside, these communities didn't score any big government grants or industrial sitings, nor were they particularly lucky. They created their successes largely on their own. Like you, the residents of these successful communItIes were trying to make a living and didn't have a lot of time for meetings. But they balanced their commitment to their community with their family obligations, jug- gled their schedules, goaded their neighbors. After false stans and a few dead ends, they pulled it off. These are ordinary folks who chose an extraordinary path, the steady and deliberate Course to a sustainable future. It's a path that's yours for the tak- ing. It relies on your understanding that a prosperous future for you, your children, and your grandchildren is based on stewardship of your commu- nity, its environment, and its economy. It starts with your commitment to act. 38 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE "~" t1 Si I I ! ---- ~ Collaborative Community Decision-Making Community is the thread that binds towns and urban neighborhoods together. It's the human suppon system that helps people survive during hard times. It's the joy of a barn dance and the tittering over the gossip column, the powerful conrinuity of a fony-year friendship, lively conversa- tions picked up mid-senrence at the post office, doing whatever it takes to get someone's car out of a snowy ditch on a frigid January night. It cannot be bought or constructed. The fabric of community is woven over rime from the networks of caring people that make a place feel like home. lr permeates the soil, the streets, the homes, schools, and businesses of your town. We have strong emotional ties to our communities. ]n his book C0771771uni~y and the Politics of Place, Dan Kemmis observes, "We mostly live in these places because that is where we wanr to be." We've made a con- scious and often difficult choice to come to, or stay in, our communities. Kemmis, who is the mayor of Missoula, Montana, also writes, "] think we are, in some fundamental way, not only chosen, but shaped by the places we inhabit. Differenr kinds of places claim differenr kinds of people." The notion of community can be romantic-people working together for the common good. But it's also practical. You don't have to feel warm and fuzzy about everyone in your community to understand that you have a common future, and that sometimes differences must be set aside to get J job done. Such an attitude is just as imponanr today as it was in the old days when, more out of hard-headed necessity than any sense of romance, neighbors worked with neighbors to raise a barn. They knew they'd need thJt neighbor's help the next time there was a big project on their land. A successful local economy in today's volatile world requires at least as much attention to neighborliness. Community inhabitanrs must work with one another whether or not they like or agree with one another. _.Community is the foundation for prosperity. Economic developmenr eHons are most successful in towns where residenrs work together for the common good, and where controversy isn't avoided but accommodated and channeled co . I A' d nstructIve y. commuI1lty where locals have met, argue , agreed and orga . d . I' h' . J: . , I1Ize to revIta Ize t elf economy IS Jar more attractIve to SOmeone looking f, I I h . b . Iv' or a p ace to ocate t elr usmess than a town desperate- , grasping for any business to which it can sell itself. Economic de I J: . d. ve opmenr proJesslOnals tell stories of towns that have Slea Ily declined d . h . . .. . . espIte avmg all the conventIonally correct mgredlenrs: a raIlhead, a nearb . . Co . Y Interstate hIghway, a resource to extract, ete. nSIStently, these ar h' ab . e towns Were resldenrs and leaders never seem to talk OUt-much less agre . d '. e on-ImpOnant eClslons. Yet development profes- ~t>c.y MoU " "\' NTAIN INSTITUTE Community is the foundation for prosperity. THE ECONOMIC RENEWAL GUIDE 39 r sionals also teIJ of those few exceptional communIties that have thrived with few physical advantages. Despite apparent shortcomings, they achieved Success because residents were wiIJing to work through their dif- ferences, develop a vision for the future, and put that vision to work. The primary barrier to successful economic development, therefore, is not the economy. It's not the price of wheat or coal, nor is it the number of tourists that come through. Rather, it's the capacity of community residents to work together. CoIJaborative decision-making is the basis for rebuilding trust and respect that may have been marred by years of wear and tear; it's a way to replace boring or painful meetings with fun and creative ones; it's the vehi- cle by which people who have been ignored can finally fuIJy participate. Collaboration makes it possible to discuss such innovative ideas as Sustain- able development in a town that might otherwise be closed to all but con- ventional wisdom. It's a way to. incorporate community values into deci- sions that might otherwise be dominated by a small elite. The fabric of any community is strengthened by improving and more tightly weaving each thread. The better the weave, the less stress and wear is felt by each individual thread. A strong community fabric will suPPOrt your effort to bring success to your town. Genuinely collaborative decision- making wiIJ tigh ten the weave and increase your potential for success. A HEALTHY COMMUNITY Community may have a far more profound influence than previ- ously understood. Health researchers began studying Rosero, Pennsylvania in the early 1960s because its inhabitants were among the healthiest people in the United States. They were surprised to find that Rosetans smoked as much, exercised as little, and faced the same stressful situations as other Americans, but somehow they expe- rienced far lower rates of heart disease, ulcers and senility. But the close-knit Italian-American town possessed one unusual characteristic: a strong sense of community. In The HeaLing Brain, researchers Roben Ornstein and David Sobel concluded: "People need people, not only for practical benefits which derive from group life, but for our very health and survival. Somehow interaction with the larger social world of others draws our attention outside of our- selves, enlarges our focus, enhances our ability to cope, and seems to make us less vulnerable to disease." 40 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE -- I I ~ - Community is a Whole New Ballgame Communities face an increasing number of rough decisions and divisive forces at a time when community spirit and traditional forms of participa- tion are declining. Several major barriers ro community decision-making have .emerged in the past generatJon: > Decisions are tougher. NOI long ago, loca] leaders focused most of their attention on which road to pave next, when ro replace the old water line, or who would fix the church roof. Today, they may have ro decide if a rich wetlands is more important than a housing pro- ject for loca] families. They could be asked if a proposed rural subdi- vision will provide a nel gain to local tax coffers. They're supposed ro know if heavy metals left on an old industrial site will contami- nate the wel]s of nearby homes. An increasing number of decisions demand a breadth of technical expertise that only a genJUS could hope to possess. Loca] leaders sel- dom have the knowledge required ro answer many technical ques- tions or the money ro hIre adequate technical advice. The normal response is ro avoid the decision, deny the problem, or blame some- one else (the government is al the top of the current blame list). Of one thing ]ocalleaders can be certain: whatever they do, someone will blame them. > Decisions are coming faster. Rapid expansion increases the rate at which difficult decisions confront a community. Loca] officials feel increasingly like the ball in a pinball machine careening out of con- tro] from one rough choice ro the next. Planning-commission agen- das are backed up six months or more. Almost as soon as one rough decision is made, it's negated by something unanticipated. Even communities that aren't expanding are profoundly influenced by the fast-changing world around them. The normal response, again: avoid, deny, and blame. > Traditional participation is down. Nationwide, participation in traditional community organizations is declining measurably. Harvard political scientist Robert Putnam notes that membership in such old standbys as churches and bowling leagues has declined 25 percent in the past 25 years. Regard]ess of age, income, or race, we're not working together and talking with one another the way we used to. After church or while our teammates were bowling, we used to talk about the schoo] bond issue or the city council's current quandary. Through these informal contacts we informed ourselves, formulated decisions, and came up with solutions ro community problems. Despite a recent upsurge in new kinds of community- building efforts such as those described in this book, roo many of ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 4 I i :! i,l w ~j J ,- ,-..) ; ~ f:'_ ~,t ;i ~ " .~ -J4 ,~ ~ ~ I .~ 1"," t,' l' us, tired from working too many hours, tend to stay home and watch TV instead of communicating with our fellow citizens. ~ Partisanship is up. During the same quarter-century there has been a marked increase in partisanship, factionalism, and special-interest rhetoric. Where once people wrangled over tough issues, then walked outside still good friends, now they leave angry and deeply divided. In many cases, single-issue groups are a reasonable reaction to poor treatment. People get fed up after years of being shut OUt of decision-making, and it should come as no surprise if they react tactlessly or show up with lawyers and demand that their position prevail. Bur when combined with the above trends, the result can be deep discord. Increasingly, community politics is "us" versus "them"-and if you're not with us, you must be one of them. Factionalism leads naturally to alienation, adding frustration and anger to the mix. Community Decisions-Top Down or Bottom Up? Faced with these challenges, community leaders attempt to make con- structive decisions. Whether they're business people, religious leaders, elect- ed officials, community organizers, labor leaders, human-service workers, or active citizens, they work long and hard to find solutions to community problems. But to their surprise and frustration, when they try to implement their solutions in a highly charged atmosphere, sparks fly. They run smack into resentment and resistance from the rest of the community-citizens who didn't have the Opportunity, or didn't take the time, to participate in the long process of finding the solution. Many frustrated leaders, sincere in the belief that they're acting in the public interest, react to criticism with anger. They may throw up their hands in despair or try to ram their ideas through to completion. But such top-down decision-making is likely to lead to failure or lingering resent- ment from the rest of the community, making the next problem even more difficult to solve. Token efforts to involve the public, which only amount to informing citizens after decisions have already made, don't work either. Citizens still feel left out; they feel no ownership in the decision. However, in a small but increasing number of communities, the "movers and shakers" are working toward local decisions from the bottom up. Beginning in the early stages of an effort to solve a particular problem, this new breed of leaders involves citizens from all walks of life. As a result, cit- izens contribute constructive ideas and understand and support the even- tual solution. Trust is born and nurtured. When widely divergent interests, ages, temperaments, and histories are represented from the beginning, citizens become better informed about community issues. Participants have a chance to understand one another's 42 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE .....- ----olIII , I' ,,~\, ... ~I ,::t', / 'I \\ I I :~ l"< ~/~ it:' t :, t ,'<: ~t · .' .j' ,1 1 ?~'} \ '. ~ '~.~)1 \..-' .-" .r- ~\l.r~"l..... !:"l:"" , ~ "~......,Y !,.;: _) <C. ~".)'~ " '} ) Ji" ..-...., 'J' t .. ' . \, L' '. <. y {, ( ~ ~\ - '~' \? \..>~. ',r ~ ,j-.,' jA'- \ J. ."" ( ~.-1 ~ '-,....",F';V \" I' ) ) <', j., ~ -.... - ~ -) . Wi, ( ~ r> " /: ';Il (." y,--!.'. '=---, ~ --L . .A~J'''",,\, ( ~. \ ) r j~V-" 'lp, -J: ~t,,' ..... :"'*7 ' r ~ ~ _~' ,1' y'= ~r . Ii: " 'j Ii ~ ~i r- r:- ~ v, " lJ t \ r / J " \ ,...; ~",." I -- 'r I ",J,,~' ~~ '" . c '-)i . . L ...."... .:','" ,.;", <,,' ,r. . ,') " -r .I. f1,i ..:.~..." (, ,'t \; · }}r I( '~"-~/"'-/~,:":".,v'''' ,', ......\r-..~ ~; .. " ,.!Ii\ '-", 'J ' --.. _ " \ 1,;.-,1 \{ ,.. , . .' , ._ C:f'~~~..~' Y ~ f i :*~:~I:i? "::. ~~r.': JO J:-.;! _)~~,l~'~/~ \SJ~~ J .~"r . s.. tL.l :.t ~.'t\' . ~~,.:S ~ . ~ r'- "" I' '-..... \. -- J ',,- '\ ''''t I \ L.: _ __ ________.._ "-- ~ ~ .~,.. .'.u ~7', ' ~. ~ '-;;-:: - ---.., 11;~~;;:~~ . ~..> ~ " _<. _ "V" ,'-:bJ/\ _ r" ~ ~ .~.... I '.. \ 1.. l ." ' .,; .,... \... I ~r j -, ,_ -;... " ,"\.. ( .,-- -...- {I ,~. """, ...../~ -( , "'-..1 ...,." r --- " "- .( \ \.-1J ., ~ Discussions in comfortable settings con be the basis for more civil discussions in public meetings. concerns and appreciate the complexities of real-life community decision- making. They learn that solutions to community problems can't be found on bumper stickers. The practical problem with this bottom-up approach is that it takes time. Most community leaders attend too many meetings already and can't bear the thought of more. But many leaders have found that the brawl that results from avoiding genuine public involvement takes even more time than a few meetings that might lead to consensus, They're looking for methods to fully involve the community without the rancor often found at public hearings. The process described in this guide is one of those methods. It's a com- fortable way to bring together community inhabitants, starr from scratch, ROCKY MOUNTAIN INSTITUTE ~ THE ECONOMIC RENEWAL GUIDE 43 and determine what the community should do about development. Using this process, citizens don't just comment on someone else's proposal at a public hearing, they work together to create their own. For this process to be effective, the people leading it must be genuinely committed to a bottom-up approach. They probably have their Own ideas about what path the community should take or what kinds of economic development projects the community should pursue. But if they attempt to impose their notions on the ER process, disaster is likely to result, no mat- ter how well-meaning they are. Other participants will understand what's going on and will either drop out or disrupt the process. For Economic Renewal to generate projects that will work best, its leaders must be willing to allow it to lead to results supported by consensus of the participants, even if those results are different from their own. (Consensus doesn't mean unanimous agreement-it means a decision that just about everyone can live with.) Community Politics Here's an example of the way communiry politics often works. Say we live in the hypothetical town of Zorchton, where the president of the Downtown Business Association (DBA) decides that a revolving loan fund would be a terrifIC help to local businesses. She publicizes a meeting down- town, invites several local organizations, and brings in a speaker to talk about revolving loan funds. At first glance, this sounds like an open and reasonable way to get some development going. But in Zorchton, as in many communities, the eco- nomic development people are suspicious of the downtown people. The Zorchton Economic Development Association (ZEDA) doesn't get along too well with the DBA. ZEDA members start wondering, "What are they trying to pull this time? They probably want to bolster their downtown shops and beat our outlying businesses. They're trying to capture that state loan money for themselves." At their Tuesday breakfast meeting, ZEDA members decide to boycott the DBA meeting. Some belittle the meeting to people they see around town. The result: poor attendance at the DBA meeting and, eventually, a failed attempt to improve the local economy. It may seem ridiculous that something as innocent as a meeting about a loan fund would turn into a local controversy. Bur it happens everywhere. If your community is normal, you can probably recall a local political bat- tle that seemed equally absurd. The issue between ZEDA and DBA isn't the loan fund, it's trust. Various groups in your community-longtime resi- dents and newcomers, perhaps, or the municipal and county govern- ments-may distrust one another. Local rivalries may be so bad that many creative and capable people have given up on community affairs. "I can't 44 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE ! \ ! I ! I I I \ I ! I I ! I i I i ~ COLLABORATION REDUCES CONFLICT In the faIl of] 992, the city council of Aspen, Colorado held a ref- erendum aslUng voters to allow the city to buy a vacated school and renovate it for various community uses. When the referendum was approved by a narrow margin, Mayor John Bennett wasn't satisfied. He took a big political risk by caIling a day-long meeting between proponenrs and opponenrs to revisit the issue. His allies were angry. "What's to talk about?" they asked. "We just spenr our time and money to win the election, and we won. Let's just get on with it!" But Bennett respected the inrerests and fears of those who had held opposing positions on the issue. The position of each person at the meeting was well known: roughly half were in favor, half were opposed. But a few hours into the meeting, all had stated their inrerests, which were heard for the first time by their adversaries. Surprisingly, virtually everyone agreed more or less with the proposed use of the old schooL The immediate value of the meeting was that it exposed the real point of disagreement: finances. Proponents trusted the city to do the project in a fiscaIly sound manner; opponenrs didn't. Thus it became clear that they had an importanr common inrerest: a finan- cially sound project. The meeting concluded successfully when the mayor asked opponenrs to serve on a financial oversight committee. Panicipanrs left the meeting largely satisfied and tallUng about ways to coIlaborate on the next issue befOre it became adversarial. deal with the politics any more," they've said. "I'm wasting my time." These individuals just wanred to accomplish something constructive and go home to their families, but now they're fed up. Their frustration is understandable; what they don't recognize, though, is that politics is simply public relationships. Whether it's getting some- thing done at work or keeping family members from strangling one anoth- er, everyone must deal with relationships on a daily basis. Why should it be any different at the community level? If you regard community politics as something to avoid or endure, then your participation will be uncomfort- able, ineffective, and infrequent. In contrast, if you regard it as nothing more than the public aspect of all human relationships, then you'll be able to take comfort in the knowledge that, as with most relationships, the dif- ficulties are outweighed by the rewards and, with some work, can usually be overcome. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 45 -- ... ct.;;. (~~ ~~~ ;~-l :'.s~ ~! If you recognize that community politics and jealousies can be a mi. ne~ field, you stand a much better chance of avoiding explosions. The shortest" distance across the minefield is not a straight line. To avoid unpleasanrne S5, you'll have to turn this way to discuss things with one group and that Wa to collaborate with another. y Collaboration Versus Cooperation Though local politics may never be a dream, it need not be a nightmare. An effective way to move toward constructive local politics is through col- laborative problem-solving. "Wait a minute," you might say, "isn't that what Zorchton's Downtown Business Association tried to do?" Well, yes and no. The DBA president was headed in the right direction, but didn't go far enough. In effect, she asked for cooperation, not collaboration. Cooperation is working together to implement an idea that's already for- mulated. Collaboration starts much earlier: it's working together to create the idea in the first place. When people have a hand in creating an idea, they're far more likely to suPPOrt it, or at least be willing to live with it. When one trusted friend seeks cooperation by asking another, ''I've gOt this great idea, why don't you help me put it into action," the second friend will probably help. But if the same words are said by the leader of one group to a competing group's leader, the question may sound more like, "Why don't you come help us look good and get our goals accomplished." Though that's not what the Zorchton DBA meant, it's what ZEDA members, in their mistrust of the DBA, may have heard. It's no wonder they didn't show up for the meeting. Collaboration is an easier, more reliable path to consensus. When com- munity politics becomes more collaborative, it becomes more constructive, less messy, and more comfortable. It's important to remember that a collaborative process such as Economic Renewal is not an attempt to get others to do what you want. Rather, it offers a powerful means for citizens to get what they want by working with others. It's carefully designed to hear and respond to the needs of all par- ticipants. Of course, this doesn't mean that ER will give everyone every- thing they want. Rather, it provides a forum in which everyone's needs can be considered. Taking Positions Versus Exploring Interests Most everyone involved in community decision~making is accustomed to taking positions. When an important local issue comes up, each side typ_ ically stakes out its position and prepares to defend it. This may be a con- scious tactic or it may just happen in the course of informal discussions. The ZEDA, for instance, certainly wasn't opposed to improving business, 46 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE I I , I I I I I ! I I I I 1 , I I t 1 PUTTING COLLABORATION TO WORK Collaboration is a challenging art. It often means talking seriously with people you don't know, agree with, or even like. It means dealing with people you may fear or those you think have power over you. To make your collaborative efforts more successful (not to mention more fun and less stressful), review the following principles. They're guaran- teed to help. > Hear their concerns and ideas before telling them yours. In important discussions, many of us tend to blurt out our own ideas. But you're far more likely to be heard if you first listen to the ideas of others. Once they've said their peace, their minds are clear to hear your ideas. > Understand their interests before describing yours. Look for the interests, fears, and values that underlie the things they're saying. Repeat what you think you're hearing. Ask if your understanding is correct. > Describe your interests instead of defending your position. Most of us have a good idea of how our interests can be ful- filled. That's our "position." If, instead, we talk about what we want-our problerris, needs, and interests-before seeking solutions, the discussion may lead to alternative ways of fulfill- ing those interests. > Join them before asking them to join you. Look for ways in which their interests are consistent with yours. Then work with them to focus on how you can both get what you want. > Set aside differences and disagreements to solve mutual problems. If you're talking with people with whom you've dis- agreed in the past, don't ignore those differences. Instead, clear the air by acknowledging them. Agree to disagree respectfully on certain points, but keep in mind that what's most impor- tant is that you're part of the same community and you're eager to collaborate on this particular effort, regardless of past differences. > Employ active listening.. Acknowledging, empathizing, and clarifYing: described on page 88, these are the most valuable skills that can be brought to any important communication. > Pursue easier issues first. Your collaborative effort may go smoothly, but if it's a highly charged discussion and the issues are difficult, tackle the easiest one first. That success will give you confidence and momentum to take on the more difficult ISSUes. ROCI(Y MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 47 ~"" ~. '''-:''', .... ;~--::",j ;.. .,. jj J .1 ! .; but when its members saw what the DBA was "up to," they concluded that the DBA had established a position in favor of the loan fund. So the ZEDA staked out its opposing position to protect its "turf." Once positions have been established in this way, it's difficult to change them without loss of face. Whatever the outcome, one side ends up losing. At fitS[ glance, the situation may appear hopeless. The losing group will get frustrated and angry. It will become even more distrustful of the other side, take tougher positions in the future, and work even more belligerent_ ly to beat the other side. But a closer look reveals real hope for similar sit- uations in your community. Underlying any person's or group's pOsition are various interests, which include both fears and reasons for their position. Looking at the interests of the ZEDA and the DBA, it becomes obvious that they have at least one important interest in common: strengthening local business. To resolve this conflict and avoid senseless battles in the future, they should first explore their common interests (and perhaps fears) rather than arguing about their particular positions. The loan fund is too closely asso- ciated with the DBA's apparent position-why not instead frame the dis- cussion as "exploring finance problems of local business"? Participants could talk about their respective difficulties in obtaining start-up capital and inventory financing. In the course of that discussion, the loan fund could be suggested as one of several options. The result of such a meeting might be a decision to create a revolving loan fund. Then again, the process of finding common interests might spark an idea for a joint project that no one anticipated. Both groups would support it because they created it together. Neither side loses; both win. Your initial attempts to focus more on the other party's interests and less on your own position may be a bit difficult. You may have put in plenty of time trying to convince others how terrific your ideas are. One way to help yourself get the hang of it is to ask a lot of questions and listen carefully to the responses before saying what you think the answers are. This respectful approach can lead to powerful results, although it may not always be pos- sible. In a case where there's only a limited window of opportunity in which to make a decision, you'll have to work fast to explore all parties' interests, bring them on board with the proposal, and not miss the deadline. But as former adversaries get used to collaborating and exploring interests, they'll find they no longer have to deal with one another at arm's length. One group can bring forward a specific idea without members of the other group assuming they're being attacked. Trust will have been established. 48 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE iIlt<!;;,.~:o,,,,,..,-;;;;;c.:'},, '. ~ Building Bridges But there are times when trust doesn't come easily. Suppose the relation- ship between the DBA and the lEDA has so eroded over the years that a deep chasm separates the two. To begin serious discussion aboUT mutual interests, they need a bridge. The best bridges are trusted friends. Though twO organizations may distrust one another, an individual in one group may be close to someone in the other group. To call the meeting aboUT business finance, the DBA president could talk to the lEDA board member whom she's known for twenry years. He's her bridge to the lEDA. They've got a long history that transcends any squabble between organizations. She could ask him to ask his group to participate in the finance meeting. If things go well at that meeting, she might request that the lEDA co- sponsor the speaker on revolving loan funds. To be even more effective on an impor- tant project, the DBA should begin a concerted bridge-building campaign. The DBA president should first gather mem- bers of her organization to list all local groups that might wonder what the DBA is "up to." They should also list all groups whose involvement will be valuable, and those that might be upset if a project goes ahead withoUT their knowledge and participation. They should be sure to include the organiza- tions they regard as adversaries. _ Next, the DBA should list key people in each gr~up and other creative people who aren't part of any organization but who may be interested. Then, the DBA should identify which of its members are closest to each person on the list. These "bridge-bui]ders" should contact their friends from the other organizations to seek their involvement and, eventually, their co-sponsorship. In some cases, there may not be friends or acquaintances to serve as bridges. If not, you'll have to build bridges from scratch. Many of us would rather be audited by the IRS than make an appointment with an unfami]- iar person who's part of another (possib]y hostile) organization. But after the initial awkwardness, bridge-building can be easy and even fun. When your interest in others is sincere, the fact you took the time to call begins the bridge-building process. Distrust won't disappear immediately, bUT nei- ther will it withstand a genuine effort to make respectful contact. ~- ./'~ 7 <:'.'--. ~..,"..... c .--J' -' ~ /~~ \ ) .- j .....:l'j'c~ ~ , ,---- , -,""'-- ~~,~\...- '.-:-.? ..", /J; \, ~ '/1' l; .~- 1 ~. r...1_......\__v. . '")... ---- \, ' "5;.~,_ , ?jt .( r i \ ',' ) 'r., \ I t i' / I I , :\ , '\ . , \ /; I t.t.'. i . I{! j~' _.r' " ':.-' i' ' ,fl. _ ..., I \ _;" 1.11 .. ----~ - I' L Friends can bridge the gops between roctJans. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 49 )'V' ._~/..v JIli:-.'>" ~-""""""","""...,.. Building bridges will enhance communication and build collaborative relationships in every community endeavor and in each step of your devel_ opment process. Each time bridges are built and used, progress becomes easier; community politics becomes less frustrating and more constructive. When former adversaries work together on a project that is POtential/y Controversial, the community will find the idea far more interesting and acceptable. Former adversaries working together is big news. It's positive grist for the rumor mill. The idea no longer appears to be Controlled by one interest group-it's on the way to being owned by the entire community. Warriors and Diplomats Many community organizations have spent much of their energy mobi- lizing to ensure that their position prevails. When a COntroversy arises, they bring out their "warriors" to do battle. The warriors' goal is to defeat the enemy. Often, these dedicated people see issues as black or white and right or wrong. They think that considering the other side's interests is a sign of weakness. High-profile individuals who enjoy the limelight, they some- times anger even their allies. You may know one or two of these people. These warriors have served their organizations so well that they general- ly represent them in town meetings, which may work well in some cir- cumstances. But a collaborative effon like Economic Renewal isn't just another community battleground for the warriors to fight over. It requires respectful public discourse. Therefore, the people who have fought your adversaries most valiantly in the past may not be the right ones to lead a collaborative process. For collaboration, you need someone who's tactful and skillful in han- dling delicate situations, someone who listens carefully to all points of view and seeks mutually satisfactory solutions. In shon, you need a diplomat. In community politics, diplomats take bigger risks than warriors. Admired by their allies for hanging tough, warriors can feel righteous and confident; diplomats risk losing allies for the sake of community cohesive- ness. Diplomats see the big picture: they know that if they win this issue by ignoring their adversaries' concerns, the adversaries will come back stronger and more angry the next time, maybe looking to even the score. Instead, diplomats build trust and build bridges for the long-term benefit of the community. It's an unusual person that can serve well as a warrior and then, later, as a diplomat. It's tough to fight adversaries one year and work with them the next. We've gotten very good at making war in our communities, but to build for the future, we also must learn to make peace. If you send your warriors to meetings that were intended to make peace, you might end up with another war. 50 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE --- COLLABORATION WORKS! In the mid-] 990s, the relationship between local leaders in the Western states and federal land management agencies is at an all- time low. After years of land-use conflict, especially regarding log- ging, mining, and grazing, at least 3S counties are so angry that they've declared sovereignty over federal lands inside county lines. In a few places, federal officials have been shot at, and offices and vehicles bombed. Southern Oregon's Applegate Valley, historically a logging area, has been one of the areas racked by conflict. But more recently, resi- dents have been dealing with these issues in a remarkably collabora- tive way. In 1992, people from the community, industry, and envi- ronmental groups came together informally to create the Applegate Partnership. The partnership has no legal authority; no politician appointed its members. No one officially represents a particular fac- tion or interest group. It's just a network of committed community inhabitants seeking practical solutions to problems on which many other towns have given up. Because it's innovative and doing things people care about, the Applegate Partnership has successfully found common ground on a number of divisive local political issues. It supported and secured a timber sale when virtually none were surviving the federal review process. Environmentalists, who had routinely appealed virtually every sale, didn't challenge this one. k a result, approximately fifty loggers went back to work. The partnership is so well trusted by government agencies that the feds have allowed it to develop a watershed plan and the state allo- cated it over $500,000 for forest restoration. Fifteen people were put to work controlling erosion, improving irrigation headgates, planting trees, installing fish screens, and fencing stock out of riparian areas. The county allowed it to review potential gravel pit sites with its own community-based effort. At a time when many local leaders are searching for someone to point their fingers at, the Applegate Partnership is getting the job done. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 51 ~ Collaboration doesn't mean giVing up your principles or setting aside your interests. Collaboration Isn't Easy Collaboration, though simple in concept, can be challenging in practice. If you're new to it, it may not come easily. But if, as your try YOur new col- laborative skills, you tend to revert to your old adversarial ways, don't dis- may. Keep at it. You are, in effect, teaching yourself and the people around you a new way of doing politics. It will make community COntroversy less destructive and more constructive, but it'll take time. Collaboration creates ethical dilemmas. For instance, is holding to one's position to the bitter end noble and virtuous? Or is ir self-serving and even irresponsible? When you "hang tough," you don't have to concern yourself with the outcome. You can say, "Whatever happens, I was right. I'm not responsible for the outcome." In contrast, diplomats seek solutions satis- factory to all sides. They risk the anger and resentment of friends and allies. They take full responsibility for the Outcome by offering shared responsi- bility to the other side. Controversy will never disappear, nor should it. Collaboration may work more on one issue, less on the next, but gradually the old adversarial approach to politics will be minimized. This chapter is written to describe politics and relationships in a com- munity where controversy, ill will, and distrust are widespread. Things may not be so difficult in your town. But even if decisions are reached relative- ly smoothly, these ideas for exploring interests, building bridges, and using diplomats will significantly improve the quality of local decision-making. The Limits of Collaboration and Consensus-Building By now you're probably asking yourself, "How far do I go with this col- laboration stuff? Do I keep trying to build consensus with people who intend to take what they want, community be damned?" These questions have no easy answers. But when you ask them, the first thing to do is question yourself. Did you sincerely make every effort to set your position aside for a while and consider the other party's interests? Are you genuinely committed to finding a solution that's in the community's long-term best interest? If your answer is yes, and the other side won't budge, then for this situation, your effortS to collaborate have probably reached their limit. You probably won't achieve consensus. Collaboration doesn't mean you have to give up your principles or set aside your interests. It may not even necessitate compromise. Rather, it requires a good-faith effort to set aside your position temporarily, fully con- sider the other side's interests, look for ways in which your respective inter- ests intersect, and seek mutually satisfactory solutions. If you attempt to collaborate with people who believe, like you, that the long-term viability of the community and its environment are paramount, 52 THE ECONOMIC RENEWAL GUIDE ROCKY MOUNTAIN INSTITUTE :.~ ;\ -~.~ 1 I 1 I I 1 ~ ...........- then you have the best chance of finding consensus. But if you're dealing with people who spout those values while their actions indicate that short- term personal or corporate gain is their number-one goal, then consensus will be more difficult, maybe impossible. The time-worn example of this disparity in goals is the community that attempts to work with a large, absentee-owned company that has a financial interest in the community. Though there are exceptional companies that genuinely want to operate in ways that are compatible with their hosts, many use their power ro run roughshod over communities. At their worst, they intimidate local leaders, manipulate laws and regulations, and essentially buy local elections. At best, they're ethical people who simply care more for their company's success than the long-term viability of the community. Collaboration may also be difficult if you're dealing with someone whose fundamental goals are different from yours. ]n that Clse, you may have to return ro the old adversarial ways of resolving differences. ]f you do end up in con flier or litigation, however, your effort to collaborate and build con- sensus will have established your credibility, and will have attracted strong allies TO your side. You will be stronger and command more respect. When dealing with a more powerful adversary, you're embarking on a challenging quest that is not the subject of this guide. Though a thorough exploration of the problem of unequal power in local politics could fill a small library, it's worth mentioning a few ideas here. When one person or group has significantly more power than another, some kinds of collaborative efforts are difficult at best. They can even be counterproductive. The powerful one can often intimidate others and can walk away from the discussion at any time without losing anything. Disproportionate power is most damaging to collaborative efforts that ate /-eactive-that is, the parties to the collaboration are reacting to some- thing that has occurred, such as a government action, a company's action, or a lawsuit. ]n contrast, proactive efforts such as Economic Renewal seek new opportunities that the community might pursue. Even someone who has never exercised any leadership or power can fully participate in Economic Renewal and help create projects that the community will get behind, often regardless of whether the projects are also supported by such powerful entities as government, industry, or advocacy groups. Disproportionate power is far less likely to distort the proactive results of Economic Renewal than collaborations that are convened in reaerion to an ex IS t In g co n troversy. ]f you, your organization, or your community are reacting to a contro- versial issue and are confronted by overwhelmingly powerful adversaries, collaborative problem-solving probably won't work. ]n that case, you'll have to even the playing field in other ways. ROCKY MOUNTAIN INSTITUTE THE ECONOMIC RENEWAL GUIDE 53 . c., ,i": :':1 (ill i One ellenive w'y '0 de,1 with pow<<lul Oppmiog intn"" i, '0 e,po ,hei, deed, '0 ,he ligh, 01 d,y p", inlo,m"ion to ,he 10,,1 neW'P'pe, L~ ,he p'pn won', p,in, i, (ol,en ,he c,,, in '''n,'' town), p,io, , 'ho'oug":;~ Iy researched facr sheer independently and disrribure ir around rOWn. c,' II ,he comp,ny i, po,hing' d,m'ging p'oject, lotee it Onto the 10"11,,1_ lor rhrough peririon. A major landfill developer, well known as a pollure r, ptOpo"d , dump "e , """" Ww Vi'gini, cowo wh<<e unemploymen, w" ove, 25 peteenL The job; wece b,dly needed, bu, local people ioi'i,ted , petirion and forced rhe dump Onto rhe bailor. In rhe campaign rhar foI- lowed, 10'" I ci, izc '" we te 0 u" pent by the po" Ute, 200 to I, Yet ,he eiti,,", won d" clmion by a 2-,0-1 m"gin. They',e now wo,king col1abo,"'ivdy ro creare businesses and jobs comparible with community values. Though lawsuirs are nor necessarily recommended, disproportionate power is one reason rhar a group with little power might sue a more pow- eclul gcoup. The bw;ui, teod, '0 pmduce a ",Ii"ic b"i, 1m negot'"ion, which can lead ro a murually sarisfacrory settlemenr. However, ir would be naive ro say rhat exposure, disclosure, ballot ini- tiarive, and legal acrion are sufficient to solve rhe problem of unegual power. Ir reguires ar leasr one addirional ingredient: courage. Somerimes rhe risk of standing up ro rhese people is one's reputation in the communi_ ty. In some communiries, conrrolled by a handful of people, the risk may be one's job or Worse. Oon'r stand alone unless you musr. Thar takes extra- ordinary courage and is usually less effecrive than standing with a crowd. Look for sUPPOrt; get organized. There's strength in numbers. Even Gandhi recruired folks ro srand wirh him. If you need help getting organized, con- sider taking a COurse on community organizing ar the Highlander Center (see page 2] 6). One lasr note abour organizing ro challenge rhe powerful: even if you rhink rhey don't deserve ir, [rear rhem wirh respecr. Ir will payoff in rhe long run. JUSt because someone rries to do something Contrary to commu- nity interesrs doesn'r necessarily make them bad. In some cases, rhey're jusr decent people doing whar rhey believe to be righr. Gandhi, who spent mosr of his life rrying ro ger rhe Brirish out of India, said, "We Want the British ro leave, but we Want them to leave as friends." 'I J I i J .~ I ~ I ~ 54 THE ECONOMIC RENEWAL GUIOE ROCKY MOUNTAIN INSTITUTE